Fitch Affirms Los Angeles' - California - Rtgs; Outlook To Stable From Neg.

Business Editors

SAN FRANCISCO--(BUSINESS WIRE)--Nov. 6, 2002

Fitch Ratings is affirming the 'AA' rating on $971.3 million in City of Los Angeles, California (the city) general obligation bonds and the 'AA-' rating on $74.8 million in judgment obligation bonds and revising the Rating Outlook for both ratings to Stable from Negative. The change results from the failure of two voter initiatives on the Nov. 5 ballot. The Outlook was revised to Negative from Stable on May 16.

The May 16 Outlook revision reflected uncertainty presented by the possible secession of the San Fernando Valley (the Valley) area from the city. Subsequent to this action, a vote for secession by the Hollywood area also qualified for the ballot. In order for the secession to occur, the action must be approved both within the area seeking to separate and citywide. The Valley secession was approved by a narrow margin within that area but failed overwhelmingly citywide. The Hollywood vote failed in both the area and the city as a whole. Fitch will continue to monitor any future secession efforts should they develop.