Market Overview

Fitch Rates NYSHFA (29 Flatbush Avenue) Housing Rev Bonds, 2010 Series A 'A/F1'

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NEW YORK--(BUSINESS WIRE)--

Fitch Ratings assigns a rating of 'A/F1' with a Stable Outlook to the $90,000,000 New York State Housing Finance Agency 29 Flatbush Avenue Housing Revenue Bonds, 2010 series A. The rating is based on the support provided by an irrevocable direct- pay letter of credit (LOC) issued by Bank of America, N.A. (rated 'A/F1'; Stable Outlook by Fitch).

The bank is obligated to make payments of principal of and interest on the bonds upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The ratings will expire upon the earliest of: (a) Dec. 29, 2013, the initial stated expiration date of the LOC, unless such date is extended; (b) conversion to an interest rate mode other than the variable rate mode; (c) any prior termination of the LOC; and (d) defeasance of the bonds. The LOC provides full and sufficient coverage of principal plus an amount equal to 34 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the variable rate mode. The Remarketing Agent for the bonds is Morgan Stanley & Co. Incorporated. The bonds were delivered on December 29, 2010.

The bonds initially bear interest at a variable rate, but may be converted to an adjustable or fixed rate. While bonds bear interest in the variable rate mode, interest payments are on the first business day of each month. The trustee is obligated to make timely draws on the LOC to pay principal, interest, and purchase price. Funds drawn under the LOC are held invested in U.S. government obligations and repurchase agreements limited to such obligations, and are free from any lien prior to that of the bondholders.

Holders may tender their bonds on any business day, provided the trustee and remarketing agent are given the requisite prior notice of the purchase. The bonds are subject to mandatory tender: (1) on each conversion date; (2) upon substitution of the LOC; (3) sixteen days preceding the LOC stated expiration date; and (4) on a date not more than eight days following the trustee's receipt of notice of an event of default under the reimbursement agreement with direction to have a mandatory tender. The bonds may also be redeemed following the trustee's receipt of a notice of an event of default under the reimbursement agreement with direction to have a mandatory redemption. The bonds may be redeemed upon the trustee's receipt of a notice of non-reinstatement of the LOC interest, however this LOC provides for automatic and immediate reinstatement of interest draws. Optional and mandatory redemption provisions also apply to the bonds. Additional bonds may be issued pursuant to a separate series resolution.

Bond proceeds were used to: (a) to finance a mortgage loan to fund a portion of the costs of construction and equipping of a multi-family housing development located at 29 Flatbush Avenue in the Borough of Brooklyn in the City of New York; (b) to pay capitalized interest; and (c) to pay costs of issuance.

Additional information is available at www.fitchratings.com. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria' (Feb. 28, 2012);

--'Rating Guidelines for Letter of Credit-Supported Bonds' (June 20, 2012).

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672570

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681737

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Fitch Ratings
Primary Analyst
Linda Friedman, +1 212-908-0829
Senior Director
Fitch, Inc.
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Kasia Reed, +1 212-908-0500 x5065
Committee Chairperson
or
Mario Civico, +1 212-908-0796
Senior Director
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Media Relations:
Elizabeth Fogerty, +1 212-908-0526
Email: elizabeth.fogerty@fitchratings.com

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