S&P Affms AAA & A-1+ Rtgs of CADES.

LONDON--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/30/97-- Standard & Poor's has today affirmed the triple-'A' long-term and short-term 'A-1+' debt ratings of Caisse d'Amortissement de la Dette Sociale (CADES), following the French government's announcement that CADES is to assume FFr 87 billion ($14.5 billion) of the national social security system's financial liabilities accumulated since the beginning of 1996. The stable long-term rating outlook is also affirmed.

The ratings continue reflecting the support of the Republic of France for the obligations of CADES, a special-purpose fund that channels proceeds of a specific social contribution, the Social Debt Reimbursement levy (RDS), so as to finance the accumulated deficits of the French social insurance regime. The RDS, exclusively dedicated to CADES funding, has the very widest contribution base of any levy on individual incomes in France. CADES was established early in 1996, with the objective of amortizing via long-term debt issues the 1994-96 cumulative social security deficit valued at FFr 140 billion, over a fixed period originally extending through January 2009. The debt to be amortized will now be enlarged to include the social regime's deficit accumulated from 1996 through 1998, resulting in a 5-year prolongation of the fund. There is to be no change in the responsibility of CADES for reimbursing the French state's assumption on January 1st 1994 of liabilities corresponding to earlier financial deficits of the social security system. CADES will acquit this liability to the state, which is fully subordinated to all other obligations, in annual installments of FFr 12.5 billion. Full reimbursement is to be completed, as originally planned, by the end of January 2009.

Although obligations of CADES do not carry explicit guarantees of the Republic of France, Standard & Poor's considers that the issuer's legal framework, its functional integration with operations of the French Treasury, and its key role in financing of the national social insurance program, ensures sovereign support equivalent in practice to an explicit debt guarantee.

OUTLOOK: Stable

Although social security deficits have persisted, RDS receipts have proven consistent with forecasts and should meet future debt service requirements of CADES through the extended amortization period. Notwithstanding the increased debt burden, Standard & Poor's views the legal, financial and oversight structure underpinning CADES as adequate to secure full and prompt sovereign financial backing for all of the fund's obligations, Standard & Poor's said. -- CreditWire

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Jeanne-Francoise De Polignac, Paris (33) 1-4420-6660