Fitch Rates $300MM State of Georgia GO VRDBs 'AAA/F1+'.

NEW YORK -- Fitch assigns a rating of 'AAA/F1+' to the $300,000,000 State of Georgia, general obligation (GO) variable-rate demand bonds, consisting of $100,000,000 series 2006H-1, $100,000,000 Series 2006H-2 and $100,000,000 Series 2006H-3. The long-term 'AAA' rating is based on the credit quality of the state of Georgia. The short-term 'F1+' rating is based on three separate standby bond purchase agreements (SBPAs) provided by Dexia Credit Local, acting through its New York Branch, each supporting a respective series of bonds. Fitch also affirms the 'AAA' rating on approximately $7.2 billion in State of Georgia GO bonds. The Rating Outlook is Stable.

The SBPAs provide for the payment of the purchase price of tendered bonds in the event that remarketing proceeds are insufficient to pay the purchase price following an optional or mandatory tender of the bonds. Each SBPA is sized to cover the principal amount of the bonds, plus 189 days of interest based upon an interest rate of 9% and a year of 365 days. The SBPAs cover all interest rate modes, except when the bonds are in a term rate period greater than 13 months or a term rate period to maturity. Each SBPA will expire on the earlier of Dec. 21, 2011, the expiration date of the SBPAs, unless such date is extended, or upon the occurrence of certain events of termination, all in accordance with the terms of the SBPAs. Fitch's short-term rating will expire on any termination of the SBPAs. The remarketing agent for the 2006H-1 bonds is Banc of America Securities LLC; Lehman Brothers Inc. is the remarketing agent for the 2006H-2 bonds, and Wachovia Bank, National Association is the remarketing agent for the 2006H-3 bonds. The bonds are expected to be delivered on or about Dec. 21, 2006.

The bonds will be issued in the weekly rate mode, but may be converted to a daily, commercial paper, or a term interest rate mode. While bonds bear interest in the weekly or daily rate mode, interest is payable on the first business day of each month, commencing Jan. 2, 2007. During the weekly and the daily rate modes, bondholders have the right to tender their bonds on any business day, following the required prior notice. Bonds are subject to a mandatory tender: (1) on the day next succeeding the last day of each commercial paper period (from 1-180 days); (2) on the first day of each interest rate period; (3) upon substitution, expiration, cancellation or termination of a respective SBPA, unless rating confirmations from each of the rating agencies then rating the bonds is received in accordance with the provisions of the bond indenture; and (4) while in the term rate period, other than for a term rate period to maturity, on any date that the bonds could be optionally redeemed. The bonds are also subject to mandatory sinking fund and optional redemption pursuant to the terms of the bond indenture.

Georgia's superior 'AAA' credit standing is the result of its longstanding conservative debt management, consistent maintenance of sound finances, and a diversified and growing economy. The state has approximately $8.6 billion in tax-supported debt outstanding, most of which is general obligation. The debt burden, while growing, remains moderate, at 3.1% of 2005 personal income and $952 per capita. The state has instituted a long-range debt planning process which foresees steady growth in debt over six years, largely GOs along with GARVEE bonds, first issued earlier this year. Future debt burden is expected to remain below policy maximums, including debt per capita of $1,300 and debt to personal income of 4%. The state's pension system is well funded. Recent economic performance is solid, with October 2006 employment up 2% year-over-year, compared to 1.4% for the U.S. Growth has been particularly strong in service sectors, with leisure and hospitality up 3.7%, education and health up 3.5%, and professional and business services up 2.3%. Manufacturing employment was flat, with weakness in transportation equipment and textiles offsetting growth in other sectors. Construction continues to grow, at 2.8% in October, a slower pace than earlier in the year. Georgia personal income growth has been very strong, with second-quarter 2006 up 7.5% over the prior year, just ahead of the nation. State fiscal performance has reflected current economic strength. Fiscal 2006 ended with tax revenues of $16.5 billion, 8.8% higher than the year before, driven by individual income and sales tax collections. The state's revenue shortfall reserve balance has been brought to $740 million, or 4.3% of fiscal 2006 net revenues. Fiscal 2007 tax revenues are budgeted to grow 2.3% over fiscal 2006 actuals, to nearly $16.9 billion. Through October, fiscal performance has been much stronger than anticipated, with tax revenues 5.5% ahead of prior year figures. Individual income receipts are running 8% ahead of last year.

Bond proceeds will be used to finance certain projects and facilities for the Department of Transportation.

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