Fitch To Take Rating Actions On State of CA Variable Rate GOs Ser 2004A & 2004B

NEW YORK--(BUSINESS WIRE)-- On the effective date of Oct. 9, 2012, Fitch Ratings will take the following rating actions with respect to the ratings assigned to the State of California, variable rate general obligation bonds, series 2004A and 2004B:

--Confirm the 'A/F1', Stable Outlook rating for series 2004A1, A-4 through A-8, and A-10;

--Confirm the 'A/F1', Stable Outlook rating for series 2004B-1 through 2004B-4;

--Upgrade to 'AA-/F1+', Stable Outlook, from 'A/F1', Stable Outlook, the ratings for series 2004B5 and B6.

The rating actions are in connection with the (i) Oct. 9, 2012, mandatory tender and remarketing of the series 2004A and 2004B bonds; and the (ii) substitution of the letters of credit (LOCs) securing the bonds with a: LOC provided by Citibank, N.A. (Citibank; rated 'A/F1', Stable Outlook) for the existing LOCs provided severally by Citibank and the California State Teachers' Retirement System (CalSTRS; rated 'AA+/F1+', Stable Outlook) for series 2004A-1, A-4, A-5, A-6, A-7, A-8 and A-10; replacement LOC provided by Citibank for the existing Citibank LOCs for series 2004B-1 through B-4; LOC provided by U.S. Bank, NA (U.S. Bank; rated 'AA-/F1+', Stable Outlook), for the existing LOCs provided by Citibank for series 2004B-5 and B-6.

Pursuant to the new LOCs, the banks are 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 LOCs will expire on the earliest of: Oct. 15, 2015 (Citibank), April 15, 2015 (U.S. Bank), unless such date is extended; any earlier termination of the LOCs; and defeasance of the bonds. The Citibank LOCs provide full and sufficient coverage of principal plus an amount equal to 35 days of interest at a maximum rate of 11% based on a year of 365 days and purchase price for tendered bonds, while in the daily and weekly rate modes. The U.S Bank LOC for series 2004 B-5 and B-6 provide the same coverage but only in the weekly rate mode.

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 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, Inc.
Primary Analyst
Joseph Staffa, [phone]
Senior Director
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Mario Civicom, [phone]
Senior Director
or
Committee Chairperson
Linda Friedman, [phone]
Senior Director
or
Media Relations
Elizabeth Fogerty, [phone]
[e-mail]

Source: Fitch Ratings