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CALIFORNIA $800 MILLION GENERAL OBLIGATION BONDS RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Sept. 24 /PRNewswire/ -- California's $800 million Various Purpose General Obligation Bonds being offered for bids on Sept. 28 are rated 'AA' by Fitch. The state's $17.3 billion outstanding 'AA' general obligations are affirmed, and the credit trend, reflecting the state's as yet unproven ability to shape financial expectations to prevailing conditions, remains uncertain. The new bonds mature Sept. 1, 1994-2023; bonds maturing on and after Sept. 1, 2014 become callable beginning Sept. 1, 2003, at 102 percent.
 California's considerable long-term resources and prospects, together with the very moderate debt position, underlie the rating. Net tax-supported debt of the state amounts to $17.8 billion, or $595 per capita and 2.7 percent of personal income. Even if the deficit amount is included as debt, ratios remain within the moderate range.
 The recession has been both deeper and longer in California than expected. For the past three years, revenues have failed to meet expectations and at the close of 1992-93, the accumulated deficit was $2.7 billion, or, if certain off budget loans to school districts are included, $3.7 billion. In conjunction with the 1993-94 budget, a deficit elimination plan has been adopted, based on expenditure cuts designed to allow a large enough operating surplus to retire the deficit within 18 months, or midway through the 1994-95 fiscal year.
 While there are risks to the plan, including revenue shortfall and the recent announcement that federal aid for health and welfare costs associated with foreign immigrants will be $242 million less than budgeted, it is encouraging that revenues through August continue to be on track with expectation.
 The state economy continues to be depressed, with employment in June 1993 about 1.1 percent below the level of a year ago. Declines continue in construction, manufacturing, trade and FIRE while services are up a little. The unemployment rate in August was 9.0 percent, slightly improved from immediately preceding months. Growth in personal income has continued to lag the national achievement but in 1992, per capita personal income in the state was equal to 107 percent of the U.S. figure, ranking 10th among the states.
 -0- 9/24/93
 /CONTACT: Claire G. Cohen of Fitch, 212-908-0552/


CO: ST: California IN: SU: RTG

LD -- NY082 -- 5626 09/24/93 18:09 EDT
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Publication:PR Newswire
Date:Sep 24, 1993
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