Fitch Rates CA State Pub Works Board Lease Rev Bonds 1991 Ser A 'AAApre'; Outlook Stable

NEW YORK--()--Fitch Ratings assigns a rating of 'AAApre', Stable Outlook to the $39,250,000 State Public Works Board of the State of California (SPWB) Lease Revenue Bonds (Department of Corrections) 1991 Series A (State Prisons-Imperial County) maturing Sept. 1, 2017, with sinking fund payments on Sept. 1, 2015 and Sept. 1, 2016. The Rating Outlook is Stable.

KEY RATING DRIVERS:

The 'AAApre', Stable Outlook rating is based on the pledge of securities in the irrevocable escrow fund securing the bonds and reflects the lien of the refunded bondholders on the escrow funds and that all amounts have been invested in direct non-callable obligations of the United States. The U.S. full faith and credit is currently rated 'AAA', Stable Outlook by Fitch.

The 1991 Series A bonds were refunded on April 21, 2015 with the proceeds of the $103,990,000 SPWB Lease Revenue Refunding Bonds (Department of Corrections and Rehabilitation) 2015 Series E (Centinela and Calipatria State Prisons) as well as amounts released from two accounts associated with the refunded bonds. The ratings apply to the bonds listed by CUSIP number, below.

Pursuant to an irrevocable escrow agreement, the State Treasurer, as escrow agent, holds a separate special irrevocable escrow fund, established by the State Controller within the State's Treasury, in trust for the benefit of the refunded bondholders. All cash and securities held in this fund are pledged irrevocably to the payment when due of interest on the refunded bonds and the payment of principal when due. In the future, any substitute or additional investments may only include direct non-callable obligations of the United States. The bonds will be paid at maturity on Sept. 1, 2017 at a price of par plus accrued interest.

Grant Thornton verified the mathematical accuracy of computations relating to the adequacy of income from escrowed funds and securities to pay debt service requirements of the refunded bonds. According to the Grant Thornton verification report, the anticipated receipts from the securities and cash deposited in the escrow fund will be sufficient to pay principal and interest on the refunded bonds to their maturity date. Prior to accepting substitute investment securities or disbursing funds, the escrow agent must receive a new report verifying the continued sufficiency of escrowed funds to meet all future payments of principal and interest on the refunded bonds.

RATING SENSITIVITIES:

The rating is exclusively tied to the U.S. sovereign creditworthiness and will reflect all changes to that rating.

The 'AAApre' rating applies to the bonds with the following CUSIP number:

13068GGR1

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria', Feb. 23, 2015;

--'Guidelines for Rating Prerefunded U.S. Municipal Bonds', Dec. 9, 2014.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=862222

Guidelines for Rating Prerefunded U.S. Municipal Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=818549

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=984259

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Contacts

Fitch Ratings, Inc.
Primary Analyst
Kasia Reed
Analytical Consultant
+1-212-908-0500 x5065
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
Secondary Analyst
or
Mario Civico
Senior Director
+1-212-908-0796
or
Committee Chairperson
Linda Friedman
Senior Director
+1-212-908-0727
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com

Contacts

Fitch Ratings, Inc.
Primary Analyst
Kasia Reed
Analytical Consultant
+1-212-908-0500 x5065
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
Secondary Analyst
or
Mario Civico
Senior Director
+1-212-908-0796
or
Committee Chairperson
Linda Friedman
Senior Director
+1-212-908-0727
or
Media Relations
Elizabeth Fogerty, +1-212-908-0526
elizabeth.fogerty@fitchratings.com