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Fitch Rates New York City TFA FTS Tax-Exempt Sub. Bds Fiscal Ser B Subser B-3 'AAA/F1'

February 5, 2014

Fitch Ratings assigns a rating of 'AAA/F1' with a Stable Outlook to the $75,000,000 City of New York Transitional Finance Authority (TFA) future tax secured (FTS) tax-exempt subordinate bonds, fiscal 2014 series B subseries B-3 (adjustable rate bonds). Key Rating Drivers In a release on January 31 , Fitch noted that the 'AAA' long-term rating with a Stable Outlook is based on the credit quality of the TFA. The 'F1' short-term rating is based on the liquidity support in the form of a standby bond purchase agreement (SBPA) provided by Barclays Bank PLC (rated 'A/F1'; Stable Outlook by Fitch). The SBPA is sized to cover the payment of the principal component of purchase price plus an amount equal to 35 days of interest calculated at a maximum rate of 9 percent based on a 365 day year which is sufficient for tendered bonds in the daily, weekly, and two- day rate mode in the event that the proceeds of a remarketing of the bonds are insufficient to pay the purchase price following a mandatory or optional tender. The SBPA will expire upon the earliest of: February 4, 2016 , the stated expiration date of the SBPA, unless such date is extended; conversion of all the bonds to an interest rate mode other than the daily, weekly or two-day rate mode; substitution of the SBPA; or upon the occurrence of certain other events of default which result in a mandatory tender or other termination events related to the credit of TFA which result in an automatic and immediate termination. The short-term 'F1' rating will expire on the expiration or prior termination of the SBPA. The remarketing agent for the bonds is Barclays Capital, Inc. The bonds are expected to be delivered on or about February 4 . The bonds will be issued in the daily rate mode, but may be converted to a weekly, two-day, commercial paper, indexed, term, stepped coupon, auction or fixed rate. While bonds bear interest in the daily, weekly and two-day modes, interest is paid on the first business day of each month, commencing March 3 . Holders of bonds bearing interest in the daily, weekly and two-day rate modes may tender their bonds for purchase with the requisite prior notice. The tender agent is obligated to make timely draws on the SBPA to pay the purchase price in the event of insufficient remarketing proceeds, and in connection with the expiration or termination of the SBPA, except in the case of the credit-related events permitting immediate termination or suspension of the SBPA. Funds drawn under the SBPA are held uninvested and are free from any lien prior to that of the bondholders. The bonds are subject to mandatory tender: (1) upon conversion of the interest rate; (2) upon substitution, unless rating confirmation is delivered by Fitch; (3) upon expiration or termination of the SBPA; and (4) following the receipt of written notice from the bank of an event of default under the SBPA, directing such mandatory tender. Optional and mandatory redemption provisions also apply to the bonds. Bond proceeds will be used to finance capital projects for the City. For more information, see Fitch's press release dated January 13 , available on Fitch's web site at 'fitchratings.com '. Rating Sensitivities The short-term rating reflects the short-term rating that Fitch maintains on the bank providing liquidity support and will be adjusted upward or downward in conjunction with the short-term rating of the bank and, in some cases, the long-term rating of the bonds. The long-term rating is exclusively tied to the creditworthiness of the TFA and will reflect all changes to that rating. Additional information is available at fitchratings.com . Applicable Criteria and Related Research : --'U.S. Municipal Structured Finance Rating Criteria' ( February 27 , 2013); --'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support' ( January 27). Applicable Criteria and Related Research : U.S. Municipal Structured Finance Rating Criteria - Effective April 25, 2011 to February 28, 2012 http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=624129 Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=730736 Additional Disclosure Solicitation Status http://fitchratings.com/gws/en/disclosure/ solicitation?pr_id=818871 ((Comments on this story may be sent to newsdesk@closeupmedia.com ))


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