$21.1 billion of Future Tax Secured bonds outstanding; outlook is stableNew York, November 30, 2012 -- Moody's Investors Service has downgraded the Aa1 rating and affirmed the VMIG 1 rating assigned to the New York City Transitional Finance Authority's$75.4 million Future Tax Secured Subordinate Bonds, Fiscal 1999 A-1. The rating actions are in conjunction with the reoffering of the bonds as subordinate lien bond and the substitution of the standby bond purchase agreement that provides liquidity support for tenders. The substitution and reoffering are scheduled for December 17.

SUMMARY RATING RATIONALE

TFA's senior lien bonds are rated Aaa and its subordinate lien bonds are rated Aa1. The long-term ratings reflect the high debt service coverage provided by the pledge of New York City personal income tax and sales tax revenues, a strong legal structure that insulates TFA from potential city fiscal stress (New York City general obligation bonds rated Aa2 with a stable outlook), the open subordinate lien that permits future leverage of the pledged revenues, and New York State's (rated Aa2 with a stable outlook) ability to repeal the statutes imposing the pledged revenues. The outlook is stable. For our full discussion of TFA's long-term credit quality, see our report dated November 14.

The short-term rating is derived from the credit quality of the substitute standby bond purchase agreement (SBPA or liquidity facility) provided by TD Bank, N.A. (the Bank) effective December 17, 2012.

STRENGTHS

-- Strong legal and structural insulation from city fiscal stress

-- High debt service coverage provided by a broad stream of pledged revenues, New York City's personal income and sales taxes, and the healthy historical performance of those sources

CHALLENGES

-- The state retains the right to alter or repeal the statutes imposing the taxes pledged to the bonds

-- The cyclicality of the personal income tax, particularly as it relates to New York City's financial services industry, and more recent volatility in the sales tax

-- The indenture's open lien for subordinate bonds, which could reduce coverage, although issuance is subject to an additional bonds test requiring 3 times coverage of maximum annual debt service

OUTLOOK

The rating outlook of the TFA's Future Tax Secured Bonds is stable. Strong legal and structural payment mechanisms help to insulate the bonds from city and state fiscal stress, including short-term liquidity strain. Even amid current economic weakness, coverage of MADS remains strong, although new ability to leverage the pledged revenues could dilute that going forward.

WHAT COULD MAKE THE LONG-TERM RATING GO UP

-- A higher additional bonds test or other indenture provision increasing bondholder protections against possible dilution of coverage

WHAT COULD MAKE THE LONG-TERM RATING GO DOWN

-- Significant weakening of the pledged revenues that reduces currently high levels of coverage

-- Large additional bond authorizations that materially dilute coverageWHAT COULD MAKE THE SHORT-TERM RATING GO DOWN

-- The short-term ratings on the Bonds would be lowered if the short-term rating of the applicable Bank is lowered and could be lowered if the long-term rating of TFA was downgraded.

The principal methodologies used in this rating were US Public Finance Special Tax Methodology published in March 2012, and Variable Rate Instruments Supported by Third-Party Liquidity Providers published in November 2006. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

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Nicholas E Samuels VP - Senior Credit Officer Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Emily Raimes VP - Senior Credit Officer Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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