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Fitch to Downgrade L-T & Confirm S-T Ratings on Silicon Valley (Santa Clara, CA) 2008B Revs

NEW YORK--(BUSINESS WIRE)-- On the effective date of Nov. 1, 2012, Fitch Ratings will downgrade the long-term rating to 'A+' from 'AA' and confirm the short-term rating of 'F1' assigned to the $85,600,000 (currently outstanding $79,100,000) City of Santa Clara, California variable rate demand electric revenue bonds, series 2008B. The Rating Outlook on the long-term rating will remain Stable.

The rating action is in connection with the substitution of the irrevocable direct-pay letter of credit (LOC) previously provided by Bank of America, N.A. (rated 'A/F1', Stable Outlook) with a substitute LOC issued by The Bank of Tokyo-Mitsubishi UFJ, Ltd (rated 'A-/F1', Stable Outlook).

The long-term 'A+' rating is based on the higher of the underlying 'A+', Stable Outlook long-term rating that Fitch assigns to the bonds, and the 'A-' long-term rating of the bank providing support for the bonds in the form of an irrevocable letter of credit (LOC) from The Bank of Tokyo-Mitsubishi UFJ, Ltd. (rated 'A-/F1', Stable Outlook). The short-term 'F1' rating is based solely on the substitute LOC supporting the bonds. For information about the underlying credit rating see press release 'Fitch Rates Silicon Valley (Santa Clara, CA) Series 2008B Bank Bonds 'A+'; Stable Outlook' dated Oct. 09, 2012, available at 'www.fitchratings.com'.

Pursuant to the substitute LOC, the bank is obligated to make regularly scheduled payments of principal of and interest on the bonds in addition to payments due upon maturity, acceleration and redemption, as well as purchase price for tendered bonds. The rating will expire upon the earliest of: (a) Oct. 30, 2015, the initial stated expiration date of the substitute LOC, unless such date is extended; (b) conversion to an interest rate other than weekly; (c) any prior termination of the substitute LOC; and (d) defeasance of the bonds. The substitute LOC provides full and sufficient coverage of principal plus an amount equal to 47 days of interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the weekly rate mode. A mandatory tender of the bonds will occur on the substitution date on Nov. 1, 2012. The Remarketing Agent for the bonds is Citigroup Global Markets.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Rating Criteria', Feb. 28, 2012;

--'Rating Guidelines for Letter of Credit-Supported Bonds', June 20, 2012,

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=672570

Rating Guidelines for Letter of Credit-Supported Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=681737

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Fitch Ratings
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Mario Civico, +1-212-908-0796
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Fitch, Inc.
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Secondary Analyst
Linda Friedman, +1-212-908-0727
Senior Director
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Ronald McGovern, +1-212-908-0513
Senior Director
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Media Relations
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elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings