Fitch Ratings affirms F1+ rating on Tender Option Bond Series 2025-XL0721 trust
A change in liquidity support for Tender Option Bond Series 2025-XL0721 leaves its top short-term rating in place after amendments to the trust's legal documents. The action also maintains the long-term AA ratings with a Negative Rating Outlook on the floater and residual certificates tied to Los Angeles Convention Center lease revenue bonds.
Highlights
- Morgan Stanley Bank, N.A. replaces the liquidity facility for Series 2025-XL0721 floater certificates with an option confirmation expiring May 15, 2027.
- Fitch affirms F1+ short-term rating on Series 2025-XL0721 based on Morgan Stanley's AA-/F1+ rating, with long-term AA/Negative Outlook linked to Los Angeles Convention Center bonds.
- Any downgrade in Morgan's short-term rating or in the underlying Lease Revenue Bonds would directly trigger corresponding rating adjustments for the Series 2025-XL0721 trust certificates.
Liquidity support changes and rating basis
As reported by Fitch Ratings, Morgan Stanley Bank, N.A. will replace the liquidity facility for the Series 2025-XL0721 floater certificates with an option confirmation under amended trust documents.The agency says the short-term 'F1+' rating is based on Morgan as the option confirmation provider. Morgan carries ratings of AA-/F1+ with a Stable outlook, and the stated expiration date of the option confirmation is May 15, 2027, unless it is extended or terminated earlier.
The long-term 'AA' ratings, with a Negative Rating Outlook, on the floater and residual certificates are based on Fitch's rating of the Municipal Improvement Corporation of Los Angeles Lease Revenue Bonds, Series 2025-A, linked to the Los Angeles Convention Center. The bonds deposited in the trust are 5.000% term bonds due May 1, 2055.
Potential rating triggers for investors
The agency says the long-term ratings on the floater and residual certificates will move in line with changes to the creditworthiness rating of the underlying bonds.For the short-term rating, any downgrade in Morgan's short-term rating would lead to a corresponding downward adjustment for the floater certificates. Fitch also says the short-term rating is already in the highest category, meaning it cannot be upgraded further under the current scale.
Our earlier report on the BFS Funding I securitisation covered the annual review that kept the issuer’s variable funding notes rated AA (sf) across euro, sterling and U.S. dollar tranches. We highlighted that trade receivables performance metrics remained below trigger levels as of 28 February 2026, with credit enhancement and reserve levels providing structural support for the ratings.
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