Fitch Rates Kansas Dept of Transportation's $182MM Revs 'AA'; Outlook Stable

NEW YORK--(Business Wire)--
Fitch Ratings assigns an 'AA' rating to $181,695,000 of State of Kansas
Department of Transportation (KDOT) highway revenue refunding bonds series
2009A. The bonds are scheduled to sell through negotiation the week of Nov. 16,
2009 and will be due Sept. 1, 2015-2020. These fixed-rate bonds are being issued
to refund outstanding variable-rate demand obligations. Fitch also affirms the
underlying long-term rating of 'AA' on $1.6 billion of outstanding KDOT revenue
bonds. The Rating Outlook is Stable.

The 'AA' rating reflects the broad-based and diverse dedicated revenue stream of
the gross revenues in the state highway fund, along with the protections
afforded by a 3 times (x) maximum annual debt service (MADS) additional bonds
test. The legislature has, and may well continue to, alter the components and/or
distribution formulas of the revenues credited to the fund. However, bondholders
are insulated from the changes to the extent that the state has covenanted to
maintain revenues in the highway fund at least equal to 3x coverage of annual
debt service. In addition, certain revenues are constitutionally dedicated to
transportation.

Highway revenue bonds have been issued for a Comprehensive Transportation
Program (CTP), which has been the state's principal capital focus. They are
payable on parity, as special obligations of the state, secured by and payable
from a gross pledge of all revenues in the state highway fund, including highway
user revenues, a portion of the state's general 5.3% sales and use tax, and
federal aid.

The highway fund currently includes the constitutionally dedicated state
transportation revenues, which consist of 66.37% of fuel taxes and motor vehicle
registrations and license fees (aggregating $447 million in fiscal 2009). Also
pledged is a direct credit, at the increased rate of 0.65% since fiscal 2008, of
the state sales and use tax ($268 million in fiscal 2009). Pledged revenue
growth has been slowing in recent years, and fiscal 2009 revenues declined from
the prior year. Coverage remains strong. Despite another projected decline in
fiscal 2010, state source revenues are expected to cover MADS by about 4x times
(x); highway user revenues alone are estimated to provide more than 2.5x
coverage. Federal reimbursements are only permitted to be included in the
calculation of the 3x covenanted requirement for additional issuance when the
outstanding pre-1999 bonds mature in 2013. Fiscal 2010 MADS coverage including
federal reimbursements is estimated at about 6.5x.

The $13.5 billion 10-year CTP was initiated in 1999 as the successor to the
completed comprehensive highway program (CHP). In addition, in March 2006, the
Kansas Development Finance Authority sold $210 million of bonds to support the
transportation capital program; these bonds are payable from general fund
appropriations, subject to legislative approval. The state has expended its
authorization under the CTP, which expired in June 2009. Legislation for a new
long-range transportation program is expected to be introduced in the 2010
legislative session. The program is expected to focus on maintaining existing
highway infrastructure.

Additional information is available at 'www.fitchratings.com'.

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Fitch Ratings, New York
Ken Weinstein, +1-212-908-0578
Laura Porter, +1-212-908-0575
Douglas Offerman, +1-212-908-0889
Media Relations
Cindy Stoller, +1-212-908-0526
cindy.stoller@fitchratings.com

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