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CALIFORNIA $780 MILLION GENERAL OBLIGATION BONDS RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, March 25 /PRNewswire/ -- California's $780 million Various Purpose General Obligation Bonds, for bids on March 31, are rated 'AA' by Fitch. The 'AA' rating assigned to $17.0 billion outstanding general obligations is affirmed but the credit trend remains uncertain. The new bonds will be due April 1, 1994-2023 and are callable beginning April 1, 2003 at 102 percent.
 While California's long-term resources and prospects are considerable, the state's economy remains depressed as the recession continues to be deeper than expected. Financial operations remain deteriorated, with this year's budget out of balance, and the opening $2.2 billion general fund deficit carried forward into 1993-94. The proposed budget for 1993-94 would reach balance by June 30, 1994, through deep expenditure cuts and other measures, but vulnerabilities persist, not only in the uncertain course of the economy but also in added cost because certain legislation assumed to be enacted was not passed. For the first eight months of the fiscal 1993, revenue collections are ahead of the revised estimates, but the state indicates that this primarily reflects cash flow factors and not fundamental improvement.
 Employment loss has continued and in December 1992, the decline from December 1991 was about 1.8 percent. The unemployment rate continues to be well above the national level at 9.8 percent. For third quarter 1992, personal income rose 3.2 percent, lagging the national gain of 4.5 percent.
 California's debt position continues to be favorable. After this sale, net tax-supported debt will amount to $17.3 billion, or $577 per capita and 2.7 percent of personal income. In light of the current financial strain, the pace of borrowing is expected to be somewhat reduced.
 -0- 3/25/93
 /CONTACT: Claire G. Cohen of Fitch, 212-908-0552/


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LD -- NY090 -- 9840 03/25/93 18:00 EST
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Publication:PR Newswire
Date:Mar 25, 1993
Words:308
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