TEXT-Fitch rates Calif. $421 mln GO bonds 'AAApre'
Nov 8 - Fitch Ratings has assigned a rating of 'AAApre', Negative Outlook to the $421,360,000 State of California (the state) general obligation (GO) bonds, refunded on Oct. 4, 2012 with proceeds of the state's various purpose general obligation refunding bonds. The State Treasurer holds an account, established by the State Controller within the state's escrow fund, in trust for the benefit of the refunded bondholders. All funds and securities held in this account are pledged irrevocably to the payment when due of interest on the refunded bonds and principal upon redemption. The 'AAApre', Negative Outlook rating reflects this pledge and that all funds have been invested in direct non-callable obligations of the United States. The U.S. full faith and credit rating is currently rated 'AAA', Negative Outlook by Fitch. In the future, any substitute investments may also include senior unsubordinated direct obligations of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation that are non-callable and non-prepayable. In addition, up to $5,000 may be held in the State's Surplus Money Investment Fund. 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. These computations were contained in schedules provided to them by RBC Capital Markets, LLC, underwriter for the refunding bonds. According to the Grant Thornton verification report, the securities and cash deposited will produce amounts necessary to provide for timely payment of the debt payment schedule on the refunded bonds. Prior to accepting substitute or additional investment securities or disbursing funds to the State, 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. The 'AAApre' rating applies to the bonds with the following CUSIP numbers: 13063BH47 13062N6F9 13062N6G7 13062PKF8 13062PLJ9 13063BH62 13063BH70 13062PKJ0 13063BZA3 13062PLN0 13063BZB1 13062PKL5 13062PLQ3 13062PLR1 13062PKM3 13062PLS9 13062PLT7 13062PKN1 13062PLU4 Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable Criteria and Related Research: --'U.S. Municipal Structured Finance Rating Criteria', Feb. 28, 2012; --'Guidelines for Rating Pre-Refunded Municipal Bonds', Dec. 14, 2011. Applicable Criteria and Related Research: U.S. Municipal Structured Finance Criteria Guidelines for Rating Prerefunded U.S. Municipal Bonds
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