Fitch Affs Cameron Co., TX Int'l Toll Bridge Rev Bnds at 'A' Underlying.

Business Editors

AUSTIN--(BUSINESS WIRE)--Aug. 13, 2002

The unenhanced rating on Cameron County, TX's International Toll Bridge System's outstanding $5,825,000 series 1997 and $7,680,000 series 1998 revenue bonds is affirmed at 'A'. The bonds are insured by MBIA, whose underlying financial strength is rated 'AAA' by Fitch Ratings. The 'A+' rating on the county's outstanding $10,745,000 combination tax and international toll bridge certificates of obligation (COs) was affirmed on May 31, 2002. The COs are direct obligations of the county (and therefore carry a higher rating) and are on parity with the outstanding bridge revenue bonds. The revenue bonds are secured by net revenues of the bridge system.

The Rating Outlook is Stable. The 'A' rating reflects the bridge system's favorable operating performance, competitive toll rates, a moderate debt position, and growing service area. Typical of bridge systems, traffic is susceptible to economic cycles. Transfers of surplus revenues to the county and participating cities are of low risk, and have allowed the system to retain sufficient net income for operating reserves and liquidity.

The system is comprised of three bridges located in the greater Brownsville-Harlingen area. The additional debt associated with the construction of the Veterans Bridge (completed in 1999) has resulted in a reduced, but still solid 3.4 times (x) debt service coverage level. Liquidity position is also a positive credit feature, with cash and investments representing 35% of total operating revenues in fiscal 2001. Although fiscal 2002 traffic was initially impacted negatively by the events of Sept. 11, crossings have since rebounded and officials are projecting essentially balanced operations, after transfers. Like other government-owned bridge systems in Texas, toll rates are in excess of what is needed to support operating and debt service requirements, thereby providing Cameron County and the other participating municipalities the ability to take advantage of its relative inelasticity to toll increases in order to provide contributions for their other governmental operations. However, the bond order (the indenture) provides ample protection for bondholders, ensuring system needs are met prior to distributions. Toll rates, last adjusted in Oct. 1, 2001 for non-commercial traffic, are competitive, providing additional financial flexibility.

While Cameron County is the sole owner of the U.S. half of all three bridges, other local municipalities participated in the two newer bridges by sharing in initial operating deficits (if any) with the benefit of also sharing in any surpluses as specified in the interlocal agreements. After six years of operations, the Free Trade Bridge generated a surplus beginning in fiscal 1999. The interlocal agreement between the cities of San Benito and Harlingen and the county calls for surpluses, after the payment of operations and maintenance as well as 1.4 times (x) debt service on the bridge, to be split 25% each for the cities and 50% for the county. The Veterans Bridge, which shares surpluses evenly between the city of Brownsville and the county, has posted surpluses since its inception in fiscal 1999.

The Brownsville-San Benito-Harlingen metropolitan area continues to record steady population and economic growth. The bridge system benefits from an extensive transportation network, including the Brownsville Navigation District, a deep water port along the Gulf of Mexico and the only port of entry in Texas which boasts four methods of transportation - sea, rail, air, and highway. The bridge system provides access to other major cities and ports in Texas, including Corpus Christi and Houston. In addition, the city of Matamoros with a population of over 400,000 has the third largest concentration of maquiladoras or 'twin plants' in Mexico. The Mexican state of Tamaulipas has reportedly invested heavily on infrastructure, with relatively recent highway improvements connecting Matamoros to Monterrey, the industrial capital of Mexico.