ATLANTA — Fitch Ratings on Wednesday upgraded the long-term rating for $121 million of outstanding Series 2003B-1 bonds issued by South Carolina Transportation Infrastructure Bank to AA from A. Fitch also assigned an F1-plus short term rating.

The upgrade comes in connection with the conversion of the interest rate on the bonds to a weekly-rate mode from an auction-rate insured mode, according to a rating report written by Fitch analyst Steven Stubbs, andis based on the support provided by a letter of credit that was issued by Bank of America NA. The remarketing agent for the bonds is Banc of America Securities LLC.

The infrastructure bank has terminated a bond insurance policy with XL Capital AssuranceInc., which has been downgraded.

Debra Rountree, the director of the bank, said given the issues surrounding bond insurance, bank officials decided it best to secure a letter of credit. She also said that the debt was issued as variable rate debt in three tranches. She said there were no plans to issue debt this year.

Moody's Investors Service affirmed the A1 rating and stable outlook it assigns to all of the bank's outstanding debt, which amounts to about $2 billion.

In her rating report, analyst Maria Coritsidis stated that the A1 rating reflects the diverse revenues pledged to the bonds, including truck registration and motor vehicle registration fees, South Carolina Transportation Infrastructure Bank loan repayments, a portion of the South Carolina Department of Transportation's federal highway and non-tax revenue funding, and the program's high degree of leveraging.

The South Carolina Infrastructure Bank has financed several big-ticket projects throughout the state, but demand has been absorbing the bank's funds.

Since it was created during the mid-1990s, the bank has sold more than $1 billion of debt to fund transportation in several counties.

While the bank's finances have been strong, Coritsidis said it faces some challenges, such as volatility in key pledged revenue streams. It also faces the challenges of high fuel costs that can affect its transportation related revenues. She also said that the program is highly leveraged.

A benefit to the bank has been the implementation of a new source of revenues motor vehicle registration fees.

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