Correction: Fitch Rates Bay Area Toll Authority, CA Rev Bonds 'AA'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 3, 2003

(In a press release issued on 1/24, Fitch excluded the names of the 2003 series A and 2003 series B underwriters. The amended press release follows.)

Fitch Ratings-NY-January 24, 2003: Fitch Ratings today assigned a 'AA' long-term rating on the $75,000,000 Bay Area Toll Authority, CA (BATA, the authority) San Francisco Bay Area Toll Bridge revenue bonds, 2003 series A (auction rate), $75,000,000 2003 series B (auction rate) and $150,000,000 2003 series C (variable rate). Fitch also affirms the 'AA' underlying long-term rating on the authority's outstanding variable-rate $150,000,000 2001 series A, $75,000,000 2001 series B and $75,000,000 2001 series C revenue bonds; and the 'AA' long-term rating on the outstanding fixed-rate $100,000,000 2001 series D revenue bonds. The series 2001 variable rate bonds carry an 'F1+' short-term rating based on liquidity support from a number of banks in the form of a standby bond purchase agreements and based on BATA's own internal liquidity. The variable rate 2003 series C bonds are also expected to carry liquidity support in the form of a standby bond purchase agreement. The bonds are to be sold through negotiation via a syndicate led by JPMorgan (2003 series A), Salomon Smith Barney (2003 series B), and Stone & Youngberg LLC (2003 series C) during the week of Feb. 10 and are expected to carry bond insurance. The proceeds of the bonds will be used to finance and reimburse the costs of design and construction related to the ongoing Regional Measure One (RM1) projects. This bond issue is the second of three planned issuances in the authority's approximately $1.0 billion borrowing program.

The $300 million in variable rate debt issued in 2001 was swapped to fixed for the life of the bonds in early 2002. Only $200 million of the $300 million in variable rate debt being issued now will be swapped to fixed under a forward swap executed by the authority in mid-2002. BATA's strong annual cash flows after debt service and outstanding cash balances for a public agency, which are programmed to cash-fund a large portion of its construction mandate, more than adequately mitigate risk from the remaining variable rate exposure.

BATA's 'AA' long-term rating reflects both the critical nature of this seven-bridge system to the economic viability of the San Francisco Bay Area and the tremendous economic strength of the region even in slow economic times, which in conjunction result in solid, growing, relatively inelastic demand. BATA manages seven of the eight major crossings in the Bay Area - the eighth being the Golden Gate Bridge, which is managed by a separate entity. These bridges provide the only viable vehicular links within the Bay Area, and given the limited ability of rail and ferry systems to serve the diverse destinations within the area, are essential to sustained economic success. These fundamentals, together with currently low toll rates for an urban bridge system, the depreciated, debt-free nature of the assets that BATA acquired, and the partnership of the State in providing operational and maintenance services, including funding for the highway maintenance component of BATA's costs structure, make for very strong credit quality.

The key risk facing BATA relates to seismic activity. While this is partially being addressed by BATA's RM1 effort, the larger portion of the seismic retrofit is being directly administered and managed by the California Department of Transportation (Caltrans) under its now $5.1 billion Seismic Retrofit Program. The program, which was originally expected to cost $2.6 billion saw a huge increase in expenses primarily related to the cost of replacement of the east span on the San Francisco-Oakland Bay Bridge. To cover the additional cost, a number of state sources of funding were identified and the existing supplemental $1.00 seismic retrofit surcharge, that is applied over and above the base $1.00 toll at the BATA bridges, was statutorily extended out beyond the prior Jan. 1, 2008 sunset date until any debt associated with the seismic retrofit was retired. A finance plan assuming no further cost escalations beyond identified contingency levels has been developed by Caltrans. Given the sizable prior cost increases and the unique nature of the design and construction, cost increases can clearly not be ruled out. Once completed, the seismic retrofit is designed to allow these bridges to withstand the most catastrophic earthquake that has been experienced in the vicinity of each bridge over the last 1000 years. The retrofit at most bridges is expected to be completed within the next three years. However, the largest individual component of the program, the replacement of the east span of the San Francisco-Oakland Bay Bridge could take another five years to complete.

Prior to completion of the retrofit, a higher risk of cash flow interruption exists particularly with the Bay Bridge given the longer project implementation schedule. The most significant seismic event in recent years resulted in a one-month shut down following the Loma Prieta earthquake in 1989. That experience and the seismic retrofit notwithstanding, the nature of seismic risk is that it is unpredictable and can be catastrophic. However, the geographically dispersed seven-bridge system, which provides immense economic strength, considerable ratemaking flexibility and the very strong internal liquidity of BATA largely mitigate risk to bondholders.

Besides the possibility of revenue interruption from seismic activity, bondholders are faced with two other potential risks - cost increases in the seismic retrofit program and increased non-toll related demands eating into the authority's revenue maximization flexibility. While the statutes preclude the use of the base RM1 dollar for seismic purposes, cost increases could require an increase in the seismic surcharge rate. Secondly, California Statutes have dictated since 1977 that certain portions of various toll increases be allocated for transit purposes. Voter or legislative action to increase transit allocations and/or increase tolls to fund new transit-related endeavors could dilute the tremendous economic ratemaking flexibility that currently exists. In fact, the authority fully expects a new bill to be introduced in the state legislature this year for new capital and operating purposes.