Fitch Rts $1.1B New York State Thruway Local Hwy & Bridge Bds 'A+'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 24, 2003

Fitch Ratings assigns an 'A+' rating to the New York State Thruway Authority's (the thruway authority) $1.1 billion local highway and bridge service contract bonds. The 'A+' rating on $2.2 billion outstanding parity bonds is affirmed.

Approximately $325.3 million bonds will be sold Oct. 8 by negotiation through a syndicate led by Citigroup, including $167.7 million series 2003A tax-exempt bonds due April 1, 2008-09 and $157.6 million series 2003B taxable bonds due April 1, 2004-07. The fixed rate bonds are non-callable. On Oct. 21, $755.7 million series 2003C adjustable rate bonds in six subseries C1-C6 will be offered by negotiation through a syndicate led by Citigroup. The auction rate bonds are callable with details to be determined at negotiation. Certain sub-series are expected to be insured by Ambac Assurance Corporation, MBIA Insurance Corporation and XL Capital Assurance Corporation. The three series of bonds will refund a like amount of outstanding local and highway bridge bonds.

Local highway and bridge bonds are special limited obligations of the thruway authority, acting as a financing vehicle for the state of New York (the state). They are payable from and secured by payments to be made by the state, pursuant to the service contract. Legislative appropriations are the source of the service contract payments. The thruway authority is also the issuer of separately secured highway and bridge trust fund bonds for the state and has issued two series of state personal income tax revenue bonds for local transportation purposes. It is expected that future bonds issued for local transportation purposes will be secured by the personal income tax while refunding bonds may use either security. With this issue, the state continues the restructuring and modernizing of debt resolutions for its various authorities to achieve debt service savings, eliminate the debt service reserve fund requirement and to allow the use of variable rate debt.

The rating on the service contract bonds reflects the credit of the state, whose general obligation bonds are rated 'AA-' by Fitch. While New York is a wealthy state, with a broad and diverse economy, the significant non-realization of expected personal income tax receipts, the effects of Sept. 11 and the lack of recovery from recession have created financial pressure, leading to deficit funding and expanded budget gaps in future years. Fitch rates bonds secured by state appropriations 'A+'.

The local highway and bridge program includes the consolidated local and street highway improvement program (CHIPS), which provides state aid for non-state highway systems, the Marchiselli program which provides matching funds for federal grants, two suburban highway programs whose borrowing authorizations have been completed and a multi-modal program for which future funding has been shifted to the state's dedicated highway and bridge trust fund. As part of the 2001-05 state transportation plan, an additional $1,371 million was approved for the local highway and bridge programs.