Fitch Rates NYS EFC NYCMWFA 2nd Resolution Sr Bonds 'AAA'.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 10, 2003

The New York State Environmental Facilities Corporation (EFC) $285,000,000 state clean water and drinking water revolving funds revenue bonds (New York City Municipal Water Finance Authority project - second resolution bonds), series 2003 E are rated 'AAA' by Fitch Ratings. In addition, Fitch affirms the 'AAA' rating on approximately $2.2 billion of outstanding EFC New York City Municipal Water Finance Authority Projects senior lien bonds. Proceeds from the series E bonds will be used to refinance, on a long-term basis, certain commercial paper notes issued by the New York City Municipal Water Finance Authority (NYCMWFA) to finance water pollution control and drinking water projects. The bonds are scheduled to price on April 15, through a syndicate led by Goldman, Sachs, and Co., and Salomon Smith Barney, Inc.

The EFC finances most of its state revolving funds (SRF) loans to the NYCMWFA by issuing bonds (EFCNYC bonds) under a master trust indenture separate from the master financing indenture (MFI) for all other leveraged SRF participants. SRF loans made to the authority are typically funded outside the EFC's MFI pooled loan program in order to mitigate single-borrower concentration risks resulting from the authority's significant capital needs. Debt service on senior lien EFCNYC bonds is paid from authority loan repayments and reserve earnings. In addition, substantial reserves are available to pay debt service in the event of deficiencies. The bonds are further secured by released reserves from the statewide MFI on a subordinate basis. MFI reserves as of Dec. 31, 2002 were equal to approximately $754.6 million, or over 43% of the outstanding MFI bond principal at that time.

The 'AAA' rating on the EFCNYC's senior bonds reflects the strong payment interruption tolerance due to substantial reserves. As of this issue, reserve levels will be approximately $1.3 billion, or 50%, of outstanding EFCNYC senior bond principal. The reserves are sufficient to allow for continued performance over the life of the bonds assuming 32% defaults by the authority, and for the first five years assuming 100% defaults. This level of default tolerance combined with the highly unlikely possibility that an essential service provider such as the authority would experience a lengthy period of default provides the basis for the 'AAA' rating. Further, the simulated stress test does not include reserves released under the MFI pooled program which are available for payment of debt service and would allow the bonds to withstand longer periods of default. While the EFCNYC bonds are secured by reserves released from the MFI pooled loan program (rated 'AAA' by Fitch), the reserves are only available after meeting deficiencies for MFI senior and subordinate bonds.