Fitch Ratings Proposes Recalibration of Municipal Ratings

NEW YORK--(Business Wire)--
Fitch Ratings has published an exposure draft detailing proposed
changes for rating issues in the U.S. municipal finance sector.

The exposure draft and proposed rating changes follow a four-month
review by Fitch of its U.S. municipal finance portfolio. Together with
this internal review, Fitch also held a series of roundtable
discussions with issuers, investors and intermediaries regarding
Fitch's public finance ratings framework.

Following this review, Fitch is proposing a recalibration of its
municipal ratings so they denote a comparable level of credit risk as
its international ratings scale for corporate, sovereign and other
entities. Recalibration of the municipal ratings would result in
upward revisions on most bonds backed by general obligations (GO),
broad-based special taxes, or appropriations (hereafter referred to as
tax-supported), and water/sewer revenue bonds, of one to two notches.

Feedback from market participants was overwhelming in favor of a
recalibration of existing ratings as opposed to the option of creating
a separate ratings scale.

Contained in the exposure draft are preliminary revisions on 58
state, local government and water/sewer bond ratings that Fitch
believes represent the overall expected revisions across the
portfolio.

A review of historical default rates alone might justify rating
revisions of slightly more than one to two notches in some cases.
However, Fitch is concerned that the current economic downturn and
decline in housing prices, in addition to long-term challenges such as
pension and other post-employment benefits funding, may erode some of
the credit protection currently observed in tax-supported and
water/sewer credits.

Fitch will continue to assess the framework for tax-supported and
water/sewer revenue bonds once the impact of the current downturn is
clear.

Fitch will also review other U.S. public finance sectors and make
any rating revisions where appropriate.

The full report, titled 'Exposure Draft: Reassessment of Municipal
Ratings Framework' is available on the Fitch Ratings web site at
www.fitchratings.com. Feedback on the exposure draft is sought from
all interested market participants through Aug 29, 2008. Questions or
comments can be e-mailed to muniframework@fitchratings.com.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Brian Bertsch, 212-908-0549
David Weinfurter, 212-908-0336

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