Fitch Rates San Francisco's (California) $73MM Lease Revs, Series 2008-1 & 2008-2...

Fitch Rates San Francisco's (California) $73MM Lease Revs, Series 2008-1 & 2008-2 'AA+/F1+'

NEW YORK--(Business Wire)--
Fitch has assigned a 'AA+/F1+' rating to the City and County of
San Francisco Finance Corporation lease revenue refunding bonds,
$72,630,000 series 2008-1 and $72,630,000 2008-2 (Moscone Center
Expansion Project) (the Bonds). The rating is based on the rating of
two separate, irrevocable direct-pay letters of credit (LOCs)
supporting the Bonds and the application of Fitch's joint probability
methodology. The long-term 'AA+' rating is based jointly on the
underlying rating assigned to the city and county of San Francisco
lease obligations (currently rated 'A+' by Fitch), and the support
provided by the LOCs issued by Bank of America, N.A. (rated 'AA-/F1+'
by Fitch) for the series 2008-1 bonds and by State Street Bank and
Trust Company (rated 'AA-/F1+') for the series 2008-2 bonds. The
short-term 'F1+' rating is based solely on the respective LOCs. For
more information on the underlying credit please refer to an August
26th press release available on the Fitch Ratings web site at
www.fitchratings.com.

The long-term 'AA+' rating is based on Fitch's methodology which
considers the joint probability of the failure of both a rated obligor
and a bank LOC provider. The methodology results in a rating that is
up to two notches higher than the stronger of the two credits if the
following conditions are met: (1) both entities have a rating of 'A'
or higher; (2) the transaction is structured such that payments from
both the municipal issuer and the bank are in the flow of funds and
both entities would have to fail to perform before the bonds
defaulted; and (3) the credit of the bank and the rated obligor have
no more than a medium degree of correlation; in this instance, Fitch
has determined a low degree of correlation which results in a rating
of 'AA+'. If either the City and County of San Francisco lease
obligations or the bank providing an LOC for a particular series of
bonds were downgraded to 'A-' or lower, the joint probability would no
longer be applied and the long-term rating on that series would then
reflect the higher of the two ratings.

The banks are obligated to make payments of principal of and
interest on the Bonds upon maturity and redemption, as well as the
purchase price for tendered bonds during the daily and weekly rate
modes. The LOCs provide full coverage of principal plus an amount
equal to 37 days' interest at a maximum rate of 12% based on a year of
365 days and purchase price for tendered Bonds. The ratings will
expire upon the earliest of: (a) September 9, 2011, the initial stated
expiration dates of the LOCs, unless such date is extended; (b) upon
any prior termination of the LOCs; or (c) upon defeasance of the
Bonds. The underwriter for series 2008-1 bonds is E. J. De La Rosa &
Co., Inc., and Banc of America Securities LLC is the underwriter for
the series 2008-2 bonds. The bonds will be priced via a negotiated
sale on September 10, 2008.

The bonds initially bear interest at a weekly rate mode, but may
be converted to a daily, monthly, flexible, semiannual, long, or fixed
rate mode. While the bonds bear interest in the weekly rate mode,
interest payments will be made on the first business day of each
month, commencing October 1, 2008. Holders may tender their bonds on
any business day, with the requisite prior notice of the purchase.

The bonds are subject to mandatory tender upon conversion of an
interest rate mode and upon expiration, substitution, or termination
of the LOCs. Optional and mandatory redemptions provisions also apply
to the bonds.

The bonds are being issued to restructure the corporation's
outstanding lease revenue bonds series 2000-1, 2000-2 and 2000-3
(Moscone Center Expansion Project) and will be secured by lease
payments made by the city for the use and occupancy of 300,000 square
foot Moscone West convention center, which is part of the three
Moscone Convention Center facilities in the city's Yerba Buena
cultural and convention neighborhood.

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
Marina Kaganovskaya, +1-212-908-0803 (the bonds)
Karen A. Ribble, +1-415-732-5611
Amy S. Doppelt, +1-415-732-5612 (for the city)
Media Relations:
Cindy Stoller, +1-212-908-0526

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