Metropolitan Opera Association, NY

CREDIT OPINION Metropolitan Opera Association, NY Update - Moody's affirms Metropolitan Opera Association Baa1; outlook negative Update Summary Rating Rationale Moody's Investors Service has affirmed the Baa1 rating on the Metropolitan Opera Association Series 2012 bonds. The outlook remains negative. Contacts Dennis M. Gephardt 212-553-7209 VP-Senior Credit Officer dennis.gephardt@moodys.com Edith Behr VP-Sr Credit Officer/ Manager edith.behr@moodys.com 212-553-0566 The Baa1 rating incorporates the Metropolitan Opera's global brand and considerable scope for a cultural not-for-proft with $308 million in operating revenue in FY 2015. The rating is also supported by strong donor support, over $300 million of total cash and investments and management's resolve to improve operating performance. These strengths are tempered by weak unrestricted liquidity including ongoing reliance on an operating line of credit, weak operating performance and material pension liability. Credit Strengths Favorable market position as large performing arts organization with international reach Uncommonly high donor support for cultural not-for-profit with average gift revenue of $148 million per year Management resolve to improve operating performance aided by 2014 wage concessions and various expense management measures Manageable debt burden with debt service at just 2% of operating expenses in FY 2015 Credit Challenges Weak liquidity with 31 monthly days cash on hand as of FYE 2015 including $17 million drawn on an operating line of credit Operating deficits, while becoming less severe, likely to continue as endowment spending rate stays above 5% through FY 2017 and earned revenue growth prospects remain soft High reliance on gift revenue underscores centrality of donor cultivation and alignment with programming decisions Line of credit bank has secured interest in portion of cash and investments, fine art assets and real property, effectively subordinating bond holders Highly unionized work force and complex workplace rules make achieving operating equilibrium more challenging

Exhibit 1 Met Opera Aims to Increase Endowment by $300M through 2019 to Aid Operating Performance Dollar amounts in millions Forecast fiscal years based on as reported for FY 2015 plus $60M per year straight line projected progress toward endowment goal Source: Financial Statements and Moody's Investors Service Rating Outlook The negative outlook reflects the potential for rating pressure should the Met fail to achieve operating cash flow margins above 3%. The potential return to a stable outlook will likely require increased donor support for endowment, ongoing improvement in operating performance, and improved unrestricted liquidity. Factors that Could Lead to an Upgrade Meaningful and sustainable improvement in operating performance Material increase in unrestricted liquidity and reduced reliance on operating line of credit Achieving endowment growth targets and planned reduction in endowment spending rate Sustained growth of earned revenue including box office and media revenue Factors that Could Lead to a Downgrade Weakened operating performance including inability to cover debt service one time with a 5% endowment spending rate Reduction in unrestricted liquidity Meaningful reduction in total cash and investments Softened prospects for donor support or inability to meet endowment fundraising targets This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. 2

Key Indicators Exhibit 2 Source: Moody's Investors Service Recent Developments Recent Developments are incorporated under Detailed Rating Considerations. Detailed Rating Considerations Market Profile: Large Performing Arts Brand With Global Reach The Baa1 rating incorporates expectations that the Metropolitan Opera programming will continue to attract audiences and donors. With $91 million of box office revenue and $32 million of broadcast media revenue in FY 2015, the Met has significant scale relative to most performing arts not-for-profits. While the prospects for earned revenue growth are limited as evidenced by achieving only 69% of total potential box office during the 2014-2015 season, the Met should be able to continue to develop new audiences and programming choices to maintain its market share. The Met will continue to be successful in attracting donor support to fund its productions and operations. This remains a key credit strength as gifts for operations provided 48% of operating revenue in FY 2015. Operating Performance: Weak Performance Weighed Down By Endowment Spending Policy The Baa1 rating incorporates expectations that the Met will gradually move to improved operating performance as 2014 wage concessions, various efficiency measures and endowment growth support more operating stability. Buoyed by the wage concessions, operating cash flow margin moved to 2.5% in FY 2015 from a 5.1% deficit in FY 2014. Management intends to gradually reduce the endowment spending rate to 6% in FY 2016, 5.5% in FY 2017 and 5% in FY 2018. While the bulk of the operating performance improvement from wage concessions were realized in FY 2015, some of the related efficiencies will aid operating performance over time. There will be headwinds to operating improvement in FY 2016. Key near term challenges for the year include less favorable exchange rates for international HD programs, snow-related cancellation of two peak season performances on a Saturday in January 2016, and some softness in box office revenue as compared to budget. Favorably, the production costs for the season were somewhat lower than the prior year. Wealth and Liquidity: Considerable Wealth But Thin Liquidity With total cash and investments of $312 million the Met has considerable wealth but the majority of its wealth is restricted with $230 million of permanently restricted net assets. As part of its move to operating stability, the Met has set a goal to effectively double its endowment by garnering an incremental $300 million in new endowment gifts through FY 2019 as shown in Exhibit 1. Historically the Met has been more successful in raising funds for current operations, so this represents a material change. Because its hall has not been named, the Met has the potential to offer naming rights for a substantial gift. 3

The Met's endowment investments are generally well diversified and should continue to support the credit. The pool returned 6.2% for the 12 months ending July 31, 2015, ahead of many peers. The allocation favors more liquid asset classes with just 17% of investments reported as Level 3 assets. Capital needs should remain manageable and the Met has no plans for additional debt. Future major capital investments include potential lobby expansion and enhancements to backstage facilities and technology. Management intends to make these improvements only with the availability of donor support over time. LIQUIDITY The Met has thin liquidity and high reliance on an operating line of credit to fund its seasonal cash flow needs. At FYE 2015 it has $26 million of monthly liquidity. With its large expense base, this translated to 31 monthly days cash on hand, well below our Baa median of 213 days. Given its thin liquidity, the Met manages it seasonal working cash needs through active use of a line of credit. At FYE 2015, the Met had drawn $17 million on its operating line of credit, making its own effective liquidity much weaker. The line of credit has a maximum amount of $30 million and in FY 2015 the not-for-profit had amounts ranging from $7.5 million to $30 million drawn. Leverage: Predominantly Fixed Rate Debt From an operating perspective the Met has manageable leverage, with FY 2015 debt service at just 2% of operating expenses. DEBT STRUCTURE As of FYE 2015, 89% of debt was fixed rate. The Met's $98 million of bonded debt has a conservative, fixed-rate and amortizing debt structure. The line of credit with Bank of America, N.A. has a $30 million maximum. The Met has high reliance on the line to fund seasonal cash flow needs. The bank has a secured interest in certain assets of the opera including, artwork and a $22.7 million portion of the endowment with donor consent. The Met also has a standby letter of credit with the bank for $11.6 million related to its workers' compensation insurance claims. The letter of credit is secured by certain artwork and a warehouse facility. DEBT-RELATED DERIVATIVES None PENSIONS AND OPEB The Met has a large defined benefit (DB) pension liability that covers approximately 700 of its employees. The related unfunded liability increased in FY 2015 to $88 million. This liability significantly depresses the Met's net assets and signals increasing annual pension funding requirements over the near term. Expected contributions for FY 2016 are $9 million. In addition to its own DB plan, the Met contributes to multiemployer union plans, another source of expected cost escalation. Contributions to those plans were $5 million in FY 2015. Together, the Met's employer contributions represented 5% of its operations. Governance and Management: Engaged Team Focused on Operating Stability The Met has benefitted from a highly engaged Board of Directors during this recent period of operating volatility. The senior leadership team in combination with the board is focused on improving operating results, increasing the endowment and achieving long term efficiencies to aid in the ability to invest in leading programming. While the board has been content with greater than typical endowment spending rates, the combined resolve to reduce the spending rate, increase the endowment and engage in difficult union negotiations signal a clear willingness to stabilize operating performance, especially important in light of the deep deficits of FY 2014 and longer term trend of expenses growing more rapidly than earned revenue. Legal Security The Taxable Bonds, Series 2012 are unsecured general obligations of the Metropolitan Opera Association. There are no additional bonds tests or financial covenants. Use of Proceeds Not applicable 4

Obligor Profile The Metropolitan Opera is one of the largest cultural organizations in the US. The Met was founded in 1883 and moved to its current home in 1966 as it became part of Lincoln Center. Its opera house, with 3,786 seats, is owned by Lincoln Center for the Performing Arts (LCPA). The Met's relationship with LCPA, including its use of the hall, is defined through a long term Constituency Agreement. If the Met exercises its remaining optional renewal period, which is likely, the agreement will run through 2066. Given the recent capital renewal of the Lincoln Center campus and the Met's plans to invest in its facilities there we expect its Manhattan home to remain stable despite its lack of direct ownership. Methodology The principal methodology used in this rating was Not-for-Profit Organizations (other than Healthcare and Education) published in March 2014. Please see the Ratings Methodologies page on www.moodys.com for a copy of this methodology. 5

2016 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved. CREDIT RATINGS ISSUED BY, INC. AND ITS RATINGS AFFILIATES ("MIS") ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND CREDIT RATINGS AND RESEARCH PUBLICATIONS PUBLISHED BY MOODY'S ("MOODY'S PUBLICATIONS") MAY INCLUDE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY'S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY'S OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. CREDIT RATINGS AND MOODY'S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY'S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY'S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE. MOODY'S CREDIT RATINGS AND MOODY'S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS OR MOODY'S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody's Publications. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S. To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody's Investors Service, Inc. for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Investor Relations Corporate Governance Director and Shareholder Affiliation Policy." Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors. It would be reckless and inappropriate for retail investors to use MOODY'S credit ratings or publications when making an investment decision. If in doubt you should contact your financial or other professional adviser. Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively. MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for appraisal and rating services rendered by it fees ranging from JPY200,000 to approximately JPY350,000,000. MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements. REPORT NUMBER 1019238 6

Contacts Dennis M. Gephardt VP-Senior Credit Officer dennis.gephardt@moodys.com 7 CLIENT SERVICES 212-553-7209 Americas 1-212-553-1653 Asia Pacific 852-3551-3077 Japan 81-3-5408-4100 EMEA 44-20-7772-5454