Standard & Poor’s on Oct. 17 raised its rating on New York City’s fiscal 2006 subseries H-1 and H-2 variable-rate demand bonds to AA/A-1 from BBB/A-2. The outlook is stable.

“The upgrade follows the substitution of a standby letter of credit covering both subseries provided by Dexia Credit Local with a standby bond purchase agreement provided by JPMorgan Chase Bank N.A.,” said Standard & Poor’s credit analyst Lindsay Wilhelm.

S&P said in a statement that the long-term component reflects the general obligation pledge of the city, which it rates AA with a stable outlook. The short-term component, according to S&P, reflects its short-term rating on JPMorgan Chase Bank and “addresses the likelihood that bondholders will receive interest and principal payments if they exercise the put option.”

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