Fitch To Upgrade Texas Vets Housing Assistance Fund II 2007A S-T to 'F1+'; Confirm 'AA+' L-T.

NEW YORK -- Effective Feb. 4, 2009 Fitch Ratings will upgrade the short-term rating for the State of Texas' $50,000,000 general obligation (GO) bonds, Veterans' Housing Assistance Program Fund II Series 2007A to 'F1+' from 'F1'. Fitch will also confirm the long-term rating at 'AA+'. The Rating Outlook is Stable.

The rating actions are in connection with the substitution of the current standby bond purchase agreement (Standby) issued by DEPFA Bank PLC acting through its New York Branch (DEPFA) which provides liquidity for the Bonds, with a Standby issued by State Street Bank and Trust Company (State Street). On the effective date of Feb. 4, 2009, the short-term rating on the Bonds will be upgraded to 'F1+' based on the State Street Standby.

The long-term 'AA+' rating is based on the GO rating assigned by Fitch to the State of Texas. The 'AA+' long-term rating on Texas GO bonds reflects the state's low debt and conservative financial operations and an economy that has expanded and diversified. Financial pressures arise from the demand that rapid growth places on the state's consumption-based tax system, as well as from efforts to address transportation needs and property tax relief. Texas economy until recently has shown few signs of slowing, although the state now anticipates a notable economic and revenue slowdown going forward; the fiscal 2010-2011 appropriations budget will be finalized in the spring.

The short-term rating for the bonds will expire upon the earliest of: February 3, 2012, the stated expiration date of the Standby; any prior termination of the Standby; or defeasance of the bonds.

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.