Fitch Expects to Rate California (Fresno County) Tobacco Bonds.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. expects to assign the following ratings to California County Tobacco Securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. Agency's (the Agency) tobacco settlement asset-backed bonds (issued on behalf of Fresno County Tobacco Funding Corporation): -- Subordinate series 2006A 'BBB'; -- Subordinate series 2006B 'BBB-'; -- Subordinate series 2006C 'BB'. The subordinate series 2006D bonds will not be rated by Fitch. The three classes of subordinate bonds being issued by the Agency total approximately $47.5 million and consist of tax-exempt turbo capital appreciation bonds, possessing maturities of June 1, 2046, 2046 and 2055 respectively. The expected ratings of the above referenced bonds address the issuer's ability to make timely payments of the subordinate series 2006A, subordinate series 2006B, and subordinate series 2006C bond's accreted values by their respective maturity dates. The ratings are based on the structure of the bonds issued, and the credit quality of the collateral securing the bonds, which consists of annual payments and strategic contribution payments by the three largest domestic tobacco manufacturers -- Philip Morris Inc., R.J. Reynolds Tobacco Co., and Lorillard Tobacco Co. (the original participating manufacturers (OPMs)) -- under a master settlement agreement (MSA (Metropolitan Service Area) An urban area with at least 50,000 people plus surrounding counties. There are 306 MSAs and 428 RSAs (rural service areas) in the U.S. MSAs and RSAs are used to allocate cellular licenses. ) entered into with the attorneys general of 46 states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , the Commonwealth of Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , the U.S. Virgin Islands, the Commonwealth of Northern Mariana Islands Northern Mariana Islands (märēä`nä), commonwealth associated with the United States (2005 est. pop. 80,400), c.185 sq mi (479 sq km), comprising 16 islands (6 inhabited) of the Marianas chain (all except Guam), in the W Pacific , American Samoa American Samoa, officially Territory of American Samoa, unincorporated territory of the United States (2000 pop. 57,291), comprising the eastern half of the Samoa island chain in the South Pacific. , and Guam. Fitch's view of the credit quality of the collateral takes into account two fundamental characteristics of the MSA: since payments under the MSA are based on the relative market share of the domestic tobacco manufacturers, the payment obligation can be considered an industry obligation, which Fitch currently deems to be rated 'BBB-' on an unsecured basis; and the MSA should survive the bankruptcy of a domestic tobacco manufacturer, making it more likely that the manufacturer would continue to make payments under the MSA ahead of its unsecured indebtedness. These are the major characteristics of the MSA that support and, at the same time, limit the expected rating of the tobacco settlement senior bonds to 'BBB'. Accordingly, the expected rating on this transaction is linked to and will move with Fitch's future assessment of the tobacco industry's overall credit quality. The credit quality of the industry, in turn, will be significantly influenced by the underlying ratings of the three major domestic tobacco manufacturers and Fitch's view of the relative strength of those three manufacturers within the overall domestic tobacco industry. For a more detailed discussion of the industry, see Fitch Research on 'U.S. Tobacco Industry Report - On the Verge On the Verge (or The Geography of Yearning) is a play written by Eric Overmyer. It makes extensive use of esoteric language and pop culture references from the late nineteenth century to 1955. of Industry Altering Decisions' dated Oct. 10, 2005 available on the Fitch Ratings web site at 'www.fitchratings.com'. In addition, since payments under the MSA are subject to various adjustments and offsets based on several factors, including cigarette consumption, Fitch developed a series of cash flow stresses to determine the transaction's ability to make timely payments of each bond's accreted value on their respective maturity dates. Therefore, the expected rating is also based on the transaction's ability to withstand cash flow stresses commensurate with a 'BBB' rating for the subordinate series 2006A bonds, a 'BBB-'rating for the subordinate series 2006B bonds, and a 'BB' rating for the subordinate series 2006C bonds. Finally, the expected ratings reflect the transaction's sound legal and financial structures. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. 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 Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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