Fitch Rates Northside ISD, Texas' 2006B & C Refunding Bonds 'AAA'.

NEW YORK -- Fitch Ratings assigns a rating of 'AAA' to the Northside Independent School District (ISD), TX, variable-rate unlimited tax refunding bonds, consisting of the following:

-- $50,000,000 series 2006B;

-- $50,000,000 series 2006C.

The long-term 'AAA' rating for each series of bonds is based on the guarantee provided by the Permanent School Fund of Texas (PSF; financial strength rated 'AAA' by Fitch). The PSF guarantees all principal and interest payments due on the bonds. Two separate standby bond purchase agreements (SBPAs) will be issued on the closing date by DEPFA BANK plc, acting through its New York Branch. No short-term rating will be assigned at this time since no optional tender is permitted during the initial rate period of five years for the series 2006B bonds and six years for the series 2006C bonds.

The SBPAs provide for the payment of the purchase price of tendered bonds during the initial and variable rate modes in the event the proceeds of a remarketing of the bonds following a tender are insufficient to pay the purchase price. During the initial rate period, a mandatory tender is required at the end of this period, or upon termination, substitution or an event of default under the SBPAs. Each of the SBPAs is sized to provide for the entire principal amount of the bonds and 180 days of interest at the maximum interest rate of 10%, based on a year of 360 days. The SPBAs supporting these two series of bonds will expire on June 15, 2012, unless such date is extended, or upon the occurrence of other events of termination, according to their terms. The remarketing agent for both series of bonds is A.G. Edwards & Sons, Inc. The bonds are expected to be delivered on or about May 4, 2006.

The initial rate period for the series 2006B and series 2006C bonds will commence on the closing date and extend to May 31, 2011 for the series 2006B bonds and to May 31, 2012 for the series 2006C bonds. The initial rate will be a set term rate, with the interest payment dates during the initial rate period occurring on June 1, 2006 and each June 1 and Dec. 1 through June 1, 2011 and June 1, 2012, respectively. Thereafter, the bonds will bear interest at a term rate to be determined by the remarketing agent. After such term rate, the bonds may remain in the term rate mode or may be converted to a weekly, monthly, quarterly, semiannual, flexible or fixed-rate mode.

Bondholders are required to tender their bonds for purchase at the end of the initial rate period. Bonds are also subject to mandatory tender upon: the conversion to a variable rate, flexible rate or fixed interest rate mode; on the business day preceding the expiration or termination of the SBPA, and on the business day preceding the of delivery of a substitute liquidity facility, unless such substitution will not cause a reduction or withdrawal of the rating on the bonds. Bonds are also subject to purchase in lieu of redemption pursuant to the terms of the bond Order.

For additional information on the Northside ISD's underlying rating, see Fitch's press release dated March 30, 2006 ('Fitch Rates Northside ISD, TX's $175MM Unltd Tax Rfdg Bonds 'AA-'') and available on the Fitch Ratings web site at www.fitchratings.com.

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.