Fitch Rates $100MM San Diego County (CA) Ser 2008B 'AA/F1+'

2008-07-25 23:27:03 -

- Fitch Ratings assigns a rating of 'AA/F1+' to the County of San Diego taxable pension obligation bonds, consisting of:

--$50,000,000 series 2008B-1;

--$50,000,000 series 2008B-2.

The proceeds of the bonds, along with the proceeds of the County's fixed rate taxable pension obligation bonds, series 2008A will be used to refund all of the county's outstanding taxable pension obligation bonds, series 2002B (auction rate securities).

The long-term 'AA' rating reflects the county's very low debt burden, sound financial operations, and very strong and effective financial and debt policies, as well as concern over the economic and financial impact of the evident weakness in the residential real estate market. Fitch believes the county's strong fiscal discipline and high reserve levels should enable it to sustain sound finances despite minimal tax base growth and likely state aid reductions.

The short-term 'F1+' rating on the bonds is based on the liquidity support of the standby bond purchase agreement (SBPA) provided by Landesbank Baden-Wurttemberg, acting through its New York Branch. The SBPA provides for the payment of the principal component of the purchase price and up to 36 days of interest calculated at a maximum rate of 15% per annum based on a year of 365 days, while the bonds bear interest in the weekly rate mode. The SBPA will expire on Aug. 7, 2013, unless extended or earlier terminated pursuant to its terms. The remarketing agent for the series 2008B-1 bonds is Citigroup Global Markets Inc. and De La Rosa is serving as remarketing agent for the series 2008B-1 bonds. The bonds are expected to be delivered on or about Aug. 7, 2008.

The bonds initially bear interest in the weekly rate mode, but may be converted to bear interest at the daily, bond interest term, or long-term rate. While the bonds bear interest in the weekly rate mode, interest is payable on the first Wednesday of each month, commencing Sept. 3, 2008. Holders of bonds bearing interest at a daily or weekly rate mode may tender their bonds for purchase with prior notice. The bonds are subject to a mandatory tender upon conversion of the interest rate modes, upon the expiration, termination, or substitution of the SBPA, and upon the direction of the county, while bearing interest in the daily or weekly modes. The bonds are also subject to mandatory and optional redemption.

For additional information on the long-term rating, please see the Fitch report 'San Diego County, CA' dated July 22, 2008, available on the on Fitch web site at www.fitchratings.com.

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
Marina Kaganovskaya, 212-908-0803, New York
(short-term rating)
Amy S. Doppelt, 415-732-5612, San Francisco
Alan Gibson, 415-732-7577, San Francisco
(long-term rating)
or
Media Relations:
Sandro Scenga, 212-908-0278, New York