CA Pub Works Board $233M Bonds Rated `A', `A+' by Fitch IBCA.

NEW YORK--(BUSINESS WIRE)--June 4, 1999--

California Public Works Board's $47,535,000 lease revenue bonds 1999 series B are rated `A' by Fitch IBCA, and the board's five series of lease revenue refunding bonds totaling an estimated $185,700,000 million, are rated `A' and `A+' by Fitch IBCA.

The bonds will be sold through negotiation by a syndicate led by J.P. Morgan & Co. on or about June 14. The refunding bond series and ratings are as follows:

Rated `A':

-- $49,140,000 lease revenue refunding bonds (Department of

Corrections) 1999 series A;

-- $65,050,000 lease revenue refunding bonds (Department of

Corrections) 1999 series B; and

-- $23,940,000 lease revenue refunding bonds (Department of

Corrections) 1999 series C.

Rated `A+':

-- $13,000,000 lease revenue refunding bonds (The Regents of the

University of California) (Various University of California

Projects) 1999 series A; and

-- $34,570,000 lease revenue refunding bonds (The Regents of the

University of California) (Various University of California

Projects) 1999 series B.

Sound credit fundamentals are provided by the essentiality of the facilities financed by the original bond issues, strong legal and structural features of each lease and California's long-term credit prospects. Fitch IBCA rates California's general obligation bonds `AA-'. The higher rating for the University of California series reflects the university's availability of funds independent of state assistance and the system's overall credit quality.

California's general obligation rating takes into account the state's fundamental strengths of California, buttressed by the extent of economic recovery and the return of fiscal stability. Rather than slowing as expected, the state's economic expansion has regained strength. Both employment and personal income are showing good growth, with increases of 3.5% and 6.1%, respectively, in 1998. Similar gains are expected in 1999, with slowing in 2000. State personal income growth was faster than in the nation in both 1997 and 1998, reversing the trend shown in 1991-96 and on a per capita basis, the states gains have matched or exceeded the U.S. for three consecutive years.

The economic resurgence has been reflected in the May revisions to this year's operations and to the recommended budget for 1999-2000. Revenues have been upwardly revised by about 2.9% this year and 4.5% for next year, mostly due to expected performance of the personal income tax. The new estimates provide about $4.3 billion additional revenue, some of which is recommended for expenditure, including $1 billion pay/go capital; $985 million would be held in the reserve and $658 million set aside for specific purposes. The recommended reserve, set-asides and capital allocation total $2.7 billion, or more than 4% of estimated revenues. The budget is still under consideration by the legislature.