Fitch Ratings Upgrades New Castle County, Delaware To 'AAA'.

Business Editors

MCLEAN--(BUSINESS WIRE)--Oct. 2, 2002

Fitch assigns an 'AAA' rating to New Castle County, DE's (the county) approximately $35,875,000 general obligation bonds, refunding series 2002A scheduled for negotiated sale through a syndicate led by Fahnestock & Co., Inc. on or about Oct. 16, 2002. At this time Fitch also upgrades the county's $122.2 million (net of refunded bonds) outstanding general obligation bonds to 'AAA' from 'AA+'. Dated Oct. 15, 2002, the current offering will mature serially on Oct. 1, 2003-2017, and pay interest semiannually April 1 and Oct. 1, beginning April 1, 2003. The bonds represent a general obligation of the county payable from an unlimited ad valorem tax levied on all taxable property within the county. Bond proceeds will advance refund the county's series 1991, 1996 and 1997 general obligation bonds for net present value savings estimated at 3.38% of refunding par.

The upgrade reflects Fitch's expectation that the county will be able to maintain its exceptionally strong financial position, given the enactment of a mandatory 20% budget reserve in the general and sewer funds, as well as the set aside of an additional $150 million (equal to 79% of the total 2003 budget) for future tax stabilization, capital expenditures, and other commitments. Additionally, the county has built a substantial level of pay-as-you-go capital financing into the operating budget, providing an additional layer of budgetary flexibility. Other credit strengths include a comprehensive of financial policies and planning disciplines, the county's diverse economic base, above-average per capita income levels, and low direct debt levels with rapid amortization. Management's initiatives to control spending and to aggressively pursue receivables collections, as well as increased local collections from the real estate transfer tax contributed to the rapid growth in reserves from the already robust levels experienced in the mid-1990s.

New Castle County is the northernmost in the state and includes the cities of Wilmington and Newark (general obligation bonds rated 'AA' by Fitch). Its 2000 population of 500,265, representing 64% of the statewide total, grew by 13% over the past decade. With a broad mix of employment, including several major chemical and auto manufacturing facilities, a sizable government sector that includes the state university, and a growing financial services industry, the county maintains unemployment rates well below the national average. For July 2001, the county's unemployment rate equaled 4.2%, compared to 3.9% for the state and 6.0% for the nation. Major county employers include E I Dupont De Nemours & Co. (with 11,800 employees), MBNA America (11,300), Christiana Care Health Services (5,900) and University of Delaware (4,900).

Since 1994, the county's tax base grew at a modest 1.8% annually; there have been no property tax rate increases since fiscal 1996. The tax base is relatively diverse given the county's modest geographic size, with the top 10 taxpayers equal to 9.5% of assessed valuation (AV). The merger that created AstraZeneca, Inc., an international pharmaceutical company, is expected to increase company employment in the county to 6,500 by 2007, from 2,200. Per capita personal income levels in New Castle County are 115% and 121% of those of the state and nation; respectively.

The county's six year, $518 million capital plan for 2003-2008 is focused primarily on rehabilitation and expansion of the sewer system, park improvements, and public buildings. The plan is double the size of two years ago, but much of the increased spending will come from cash already reserved. Direct debt is low at $204 per capita and 0.6% of market value; overall debt rises to a more moderate $766 per capita and 2.4% of market value, most of which is attributable to the City of Wilmington and area school districts. Amortization is above average at 69% in 10 years.