Fitch Rates Rockland Tobacco Asset Sec Corp's (Rockland County, NY) Tobacco Settlement Asset-Backed Bonds.

NEW YORK -- Fitch Ratings assigns a 'BBB-' rating to Rockland Tobacco Asset Securitization Corporation's (the corporation) issuance of tobacco settlement asset-backed bonds, series 2005A (First Subordinate), and a rating of 'BB' to series 2005B (Second Subordinate). The series 2005C (Third Subordinate) will not be rated. The series 2005 bonds will total approximately $24.9 million and comprise tax-exempt capital appreciation bonds due on Aug. 15, in years 2045, 2050, and 2060. The expected ratings of the above-referenced bonds address the issuer's ability to make timely payments of each bond's accreted value by their respective maturity dates. The series 2005 bond proceeds will be used to provide funds to Rockland County as sole beneficiary of the residual trust, reacquire a 20% portion of the tobacco settlement revenues sold to Rockland Second Tobacco Asset Settlement Corporation (RocTASC II), and pay certain costs of issuance.

The collateral securing the series 2005 bonds consists of the Rockland County Tobacco Securitization Corporation's tobacco settlement revenues (TSRs) received under the New York Consent Decree. The County of Rockland has sold all its rights, title, and interests in the TSRs to the corporation.

Rockland Tobacco Asset Securitization Corporation is a not-for-profit local development corporation organized by the County of Rockland, New York, under Not-for-Profit Law of the State of New York. The corporation is an instrumentality of, but separate and apart from, the county and state, and the rated bonds are obligations of the corporation and not of the county or state.

The ratings are based on the senior subordinate structure of the 2001 and 2003 senior bonds and among the classes of 2005 bonds being 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) entered into with the attorneys general of 46 states, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, the Commonwealth of Northern Mariana Islands, American Samoa, 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 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 of Industry Altering Decisions' dated Oct. 10, 2005, and available on the Fitch Ratings website 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 series 2005A bonds, and a 'BB' rating for the series 2005B bonds. No cash flow stresses were run for series 2005C bonds, as they were not rated. Finally, the expected ratings reflect the transaction's sound legal and financial structures.

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.