Fitch Rates $21.8MM CT Dev Auth State General Fund Obligations 'AA-'.

NEW YORK -- Fitch Ratings assigns its 'AA-' rating to three series of Connecticut Development Authority's State of Connecticut general fund obligation refunding bonds. The bonds will sell through negotiation September 23 with a syndicate led by A.G Edwards. The transaction includes: $8,310,000 of 2004 series A bonds due October 15, 2007-14, $4,765,000 of 2004 series B bonds due December 15, 2004-2015 and $8,685,000 of 2004 series C due May 1, 2005-17. The 'AA-' ratings on the authority's outstanding state general fund obligation bonds of 1994 series A, 1995 series A bonds and 1997 series A are affirmed.

The authority's state general fund obligation refunding bonds are special obligations of the authority. The 'AA-' rating on each series of bonds reflects the payment of debt service and the security afforded from state general fund payments. Such payments are deemed appropriated without further approval.

Connecticut's own general obligation bonds are rated 'AA'. Connecticut's fundamental wealth and economic resources continue to underlie its high credit quality, although debt is and will continue to be high and fiscal strain remains evident. Operating deficits were incurred in fiscal 2002 and fiscal 2003, and their funding adds to the continuing high debt burden. A third consecutive deficit was threatened for fiscal 2004 due primarily to higher expenditures, but recent revenue trends, particularly in the personal income tax, led to a surplus that is enlarged from earlier projections. With other midterm adjustments and application of a portion of fiscal 2004's surplus, the revised budget for fiscal 2005 is balanced without resorting to the expected $300 million tobacco securitization.

The bonds now offered will partially refund the authority's outstanding state general fund obligation bonds 1994 series A, 1995 series A and 1997 series A to achieve debt service savings. Each series of bonds was issued under the state's tax increment program, as will be the new refunding bonds. Under this program, tax increment revenues are designated for each project in amounts to provide coverage of maximum annual debt service of bonds issued under the program. Each project's tax increment revenues are derived from sales admissions, cabaret and dues taxes. Specific amounts are allocated to each series of bonds equal to maximum annual debt service. For the authority bonds now offered, the allocations are $737,335 for 2004 series A, $815,000 for 2004 series B and $1,570,000 for 2004 series C bonds. However, bond security rests on the payment of debt service from the state's general fund. The enabling acts also provided for a special capital reserve fund but none has been or will be provided for any of these bonds.

The authority's state general fund obligation 2004 series A bonds will partially refund the authority's state general fund 1994 series A bonds that financed the state's share of the 30,000 seat amphitheatre-performing arts center constructed in Hartford, CT. Concurrent with this sale, the authority is selling bonds to partially refund its 1994 series A general obligation bonds issued to construct the facility. The authority's state general fund obligation refunding 2004 series B bonds will partially refund the 1995 series A bonds sold to construct the 'Oakdale project', a 5,000 seat year round concert and entertainment facility in the Wallingford, CT. The authority's state general fund obligation refunding 2004 series C bonds partially refund the 1997 series A bonds for the Lake Compounce amusement park, including the adjacent water park in Bristol, CT.