Fitch to Confirm 'F1+' Rating for Texas Econ Dev Bank VRDBs Ser 2005A and 2005B

On the effective date of June 1, 2015, Fitch Ratings will confirm the short-term 'F1+' rating assigned to the $25,000,000 Texas Economic Development Bank State of Texas general obligation variable rate demand bonds (Product Development Program), taxable series 2005A and the $20,000,000 Texas Economic Development Bank State of Texas general obligation variable rate demand bonds (Small Business Incubator Program) taxable series 2005B (the bonds). The short-term rating action is in connection with the substitution of the liquidity support provided by National Australia Bank, Limited, (rated 'AA-/F1+, Stable Outlook) in the form of a Standby Bond Purchase Agreement (SBPA) with a substitute SBPA to be provided by U.S. Bank N.A., (rated 'AA-/F1+, Stable Outlook) and the mandatory tender of the bonds which will take place on June 1, 2015. The 'AAA' long-term rating with a Stable Outlook assigned to the bonds continues to be based upon the rating assigned by Fitch to general obligation bonds of the State of Texas.

KEY RATING DRIVERS

On the effective date of June 1, 2015, the short-term 'F1+' rating will be based on the liquidity support provided by the U.S. Bank, N.A. substitute SBPA.

The substitute SBPA provides for the payment of the principal component of purchase price plus 34 days of interest at the maximum interest rate of 10% for tendered bonds based on a year of 365 days during the daily, weekly rate modes in the event that remarketing proceeds are insufficient to pay the purchase price following an optional or mandatory tender. The substitute SBPA will expire on June 1, 2018, the stated expiration date, unless such date is extended or upon the occurrence of certain other events of default which result in a mandatory tender or other termination events related to the credit of the bonds which result in an automatic and immediate termination. JP Morgan Chase Securities, Inc. will continue to act as remarketing agent for the bonds.

RATING SENSITIVITIES

The short-term rating may be adjusted upward or downward in conjunction with the long-term rating of the bonds or the short-term rating of the bank. The long-term rating is exclusively tied to the creditworthiness of the bond obligor 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', dated Feb. 23, 2015;

--'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support', dated Jan. 22, 2015.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=856189

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