Effective Tuesday, February 8, 2011, the Depository Trust Company ("DTC") changed the way it processes principal and interest payments with respect to securities, including municipal securities, administered by DTC.
Pursuant to the new rules, DTC will process a principal and/or interest payment to its participants on the same day it receives such payment from the issuer, trustee or paying agent only if DTC receives the payment, together with the appropriate identifying information (including correct CUSIP numbers), no later than 3:00 p.m. Eastern Time on the payment date. Payments that are made after 3:00 p.m. or that are incorrectly identified will be made on the following day or when the identifying information is corrected and completed.
Previously, DTC collected and processed principal and interest payments on the same day, even if payments were made after established cutoff times or were incompletely or incorrectly identified. DTC determined that the processing of late or misidentified payments exposed DTC to unacceptable credit and liquidity risks.
As a result of the changes, Moody's Investors Service ("Moody's") revised its ratings guidelines. Pursuant to such revision, a payment that is delayed only one or two days because of operational or technical issues will not be treated as a default or result in rating changes if Moody's concludes that the delay is purely operational and is not likely to recur. If Moody's concludes that delays are likely to recur, its rating committees may consider a rating action with respect to such securities.