Amend: Fitch Affirms New Jersey Transit Corp. Senior COPs at 'A'.

NEW YORK -- This is a correction for a message issued on August 22, 2007. It amends the headline.

Fitch Ratings has affirmed approximately $1.2 billion New Jersey Transit Corporation (NJT) senior certificates of participation (COPs) at 'A'. NJT also has $348 million in subordinate COP's outstanding, which are not rated by Fitch. The Rating Outlook is Stable.

The 'A' rating is principally based on the strength of the revenue source and the sufficiency of Federal Transit Administration (FTA) Section 5307 formula fund reimbursements to meet lease payments. The rating takes into consideration the closed senior lien, its priority security interest in basic lease payments over the subordinated COPs, and the lack of cross default provisions. Credit concerns include the lack of a pledged backup security in the event that changes are made to federal transportation funding policy during the six-year re-authorization cycle, or if NJT fails to take required steps to appropriate federal funds. Potential disputes and resultant delays among stakeholders concerning future allocations of Section 5307 funds are also credit concerns.

NJT management has recently reported the resolution of a dispute among New Jersey and New York administrators concerning the disbursements of funds for federal fiscal years 2006 and 2007. Historically, the FTA has allocated base Section 5307 grants to urbanized areas within NJT's jurisdiction along with published criteria and calculations on how those funds area allocated among NJT's seven urbanized areas. This year, however, the introduction of new subsets of funding determined by the density and rate of growth within urbanized areas, and the lack of published FTA criteria on how those funds should be split, led to a debate among principals of the New York - Newark - Connecticut urbanized area on how its share of section 5307 funds should be distributed among the three parties.

Between the end of June and mid-July, the parties reached an agreement to split the funds for federal fiscal years 2006 and 2007. The funding splits for fiscal 2007 (which generally matches the fiscal 2006 split) are as follows:

--Base section 5307 funds - 77% to New York region and 23% to New Jersey region;

--Section 5340 (dense and growing) funds - 74% to New York region and 26% to New Jersey region.

In total, New Jersey will receive $229 million in fiscal 2007 under the Section 5307 and related programs.

Given that FTA allocates Section 5307 and related grants to the urbanized area as a whole, leaving it on the parties to decide the final distribution, there can be no assurance that future funding debates will not occur. Mitigating this concern somewhat is the current agreed frame work, which is expected to serve as a base in future fiscal years. In the event of non-receipt of Section 5307 funds, NJT management has indicated a preference to use funds outside of the trust estate rather than utilize the debt service reserve fund, which is currently fully funded. While it may be possible to borrow against the state funds to make near-term lease payments and make repayments with future 5307 grants, leaseholders have no claim on or title to any funds other than 5307 grants and timely receipt of such state funds cannot be guaranteed.

Historically, basic lease payments have matched scheduled principal and interest payments on the various series of COPs, including the subordinated COPs and have been sufficient to provide strong cash flow debt service coverage. Coverage of both senior and subordinate lien debt service on the COPs equaled 1.70 times (x) in fiscal 2006 and is expected to equal 1.83x in fiscal 2007. Coverage has ranged from a low of 1.50x in fiscal 2004 to a high of 2.21x in fiscal 2001. Though NJT is receiving fiscal year 2006 funds in fiscal 2007, payment offsets between the NJT and FTA fiscal years has mean that debt service in the current NJT fiscal year is paid with funds from the prior FTA fiscal year. Other than the ability to issue refunding COPs, the senior lien pledge was been legally closed through the fourth supplemental trust indenture. Issuance of future COPs, which is likely, will therefore be on the subordinate lien.

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.