2008-06-06 23:00:29 -

- Fitch Ratings has assigned an 'AAA' rating to the city of Winston-Salem, North Carolina's (the city's) approximately $5.1 million general obligation bonds, series 2008. The bonds are expected to price June 10. Proceeds from the issuance will be used to fund general government capital improvements. Fitch has also affirmed the outstanding GO and certificates of participation (COP) ratings for

the city outlined below:

--$94.1 million outstanding GOs 'AAA';

--Series 2001A and 2006A COPs 'AA+';

--Series 2001B, 2001C, 2004A, 2004B and 2006B COPs 'AA';

--Series 2004, 2006C, and 2008C COPs 'AAA'.

The Rating Outlook is Stable.

The 'AAA' ratings are based on the city's excellent financial operations and management, significant financial resources and diversifying economic base, and low-to-moderate debt levels with rapid amortization. The city's historical reliance on tobacco production activities for economic and financial support has declined, and the growth of health care, banking, and retail industries has reduced concerns about the tobacco industry's downsizing.

Winston-Salem is a major economic and commercial center in northwestern North Carolina and part of the growing 12-county Piedmont Triad region. Health care and biotechnology are increasing in economic prominence along with the financial services sector. The city is home to two major medical facilities (Wake Forest University Baptist Medical Center, employing 11,400 and Novant Health, which employs 7,500 at three area hospitals), a growing biotechnology research park, and the operations of one of the nation's largest banking institutions (Wachovia Corp., employing 3,055). As in many areas, the unemployment rate has increased over recent months to 5.3% in March 2008 from 4.3% a year earlier, although it remains on par with the state and nation. Income levels are on par with the nation's and slightly above the state's level.

The city's financial position is strong, characterized by ample reserve and liquidity levels. Fiscal 2007 resulted in a $2.2 million drawdown of fund balance due to increased service demands stemming from a recent annexation. However, the city's unreserved fund balance still represented a healthy 13.1% of spending. The city expects to end fiscal 2008 with a surplus, increasing its fund balance to over 15% of spending. The proposed fiscal 2009 budget shows modest growth and maintains the same tax rate.

Overall debt is moderate, at 2.51% of market value and $2,078 per capita. The fiscal years 2008-12 CIP totals $371.5 million, 76% of which is for self-supporting solid waste and water and sewer utilities. Bonds and certificates of participation will finance approximately 77.9% of the CIP. The city has $10.5 million in remaining voter authorized but unissued general obligation bonds, which it plans on issuing in July 2009.

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, New York
Rachel A. Barkley, 212-908-0514
Barbara Ruth Rosenberg, 212-908-0731
or
Media Relations:
Christopher Kimble, 212-908-0226