Amed: Fitch Rates New Jersey Environmental Infrastructure Trust's $175MM Rfdg Bonds 'AAA'.

CHICAGO -- (This is an amended version of a release issued on March 1, 2007. It updates refunding bond par amounts, sale date information and net present value savings amounts.)

Fitch Ratings assigns an 'AAA' rating to the following New Jersey Environmental Infrastructure Trust's (NJEIT) environmental infrastructure refunding bonds:

--$61,400,000 series 2007A;

--$52,780,000 series 2007B;

--$42,315,000 series 2007C;

--$2,945,000 series 2007D (AMT).

The bonds are scheduled to sell competitively on June 7, 2007. In addition, Fitch affirms the 'AAA' rating on the NJEIT's approximately $1.2 billion of outstanding environmental infrastructure and wastewater treatment bonds. Bond proceeds will be used to refund certain series of bonds associated with pool borrower obligations. NJEIT estimates that the refunding will generate aggregate net present value savings of approximately $5.4 million or 3% of refunded bonds, which will be credited to the borrowers.

The 'AAA' rating on the bonds is based on the underwriting standards employed by the NJEIT, significant loan pool diversification, high collateralization levels, and the overall credit quality of the drinking water state revolving fund (DWSRF) and the clean water state revolving fund (CWSRF) loan pools. The master trust loan pool consists of 267 borrowers. Rahway Valley Sewerage Authority represents the largest borrower at 8% of total outstanding loan repayments. Approximately 95% of loans are estimated to exhibit investment-grade characteristics.

In addition, over 95% of outstanding loans are secured by general obligation or net system revenue pledges. Annual cash flow coverage from repayments of loans, which are funded from bonds and from state revolving fund (SRF) capitalization moneys, exceeds 1.5 times (x) annually, not including substantial additional funds available in the trust. Also, excess loan repayments on each bond payment date are held through the next two bond payment dates as additional protection. The excess cash flows allow for continued bond payments even in scenarios where 50.5% of loans default for the first four years, which is equal to 341% of the default tolerance required under Fitch's 'AAA' SRF stress test.

With this issue, approximately 2% of outstanding loans are made to private and investor-owned utilities through New Jersey's DWSRF. Public system borrowing and the cross collateralization of the DWSRF with the CWSRF should more than offset any concentration risk of private borrowers as a percent of the overall loan portfolio. These utilities' default risks generally exceed those of traditional municipal SRF borrowers, but most lending should continue to be to creditworthy systems with established local franchises and state regulatory oversight.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.