Fitch to Take Rating Actions on Chicago (IL) General Obligation VRDBs, Series 2003B

On the effective date of Sept. 25, 2014, Fitch Ratings will upgrade the long-term rating to 'A+', Stable Outlook from 'A-', Negative Outlook and confirm the short-term 'F1' rating assigned to the $192,765,000 City of Chicago general obligation variable rate demand bonds, project and refunding series 2003B (2003B bonds). The 2003B bonds consist of: (1) $96,375,000 series 2003B-1; (2) $48,195,000 series 2003B-2; and (3) $48,195,000 series 2003B-3.

The rating actions are in connection with the: (1) substitution of the liquidity support provided by JPMorgan Chase Bank, N.A. (JPM Chase; rated 'A+/F1', Stable Outlook) in the form of a standby bond purchase agreement (SBPA) with an irrevocable direct-pay substitute letter of credit (LOC) to be provided by JPM Chase as support for the bonds; and (2) mandatory tender of the bonds on the effective date.

KEY RATING DRIVERS:

On the effective date, the rating will be based on the support provided by the substitute LOC issued by JPM Chase.

Pursuant to the substitute LOC, the bank is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity and redemption, as well as purchase price for tendered bonds. The rating will expire upon the earliest of: (a) Sept. 25, 2017, the initial stated expiration date of the substitute LOC, unless such date is extended; (b) conversion to any interest rate mode other than daily or weekly; (c) any prior termination of the substitute LOC; and (d) defeasance of the bonds. The JPM Chase LOC provides full and sufficient coverage of principal plus an amount equal to 46 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 daily and weekly rate modes. The Remarketing Agent for the 2003B-1 bonds is Loop Capital Markets LLC and the Remarketing Agent for the 2003B-2 and 2003B-3 bonds is JP Morgan Securities LLC.

RATING SENSITIVITIES:

The rating is exclusively tied to the short- and long-term rating that Fitch maintains on the bank providing the substitute LOC and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria', Feb. 24, 2014;

--'Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper', June 2, 2014.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736618

Rating Guidelines for Letter of Credit-Supported Bonds and Commercial Paper

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749431

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