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CALIFORNIA PUBLIC WORKS BOARD BONDS RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 CALIFORNIA PUBLIC WORKS BOARD BONDS RATED 'A+' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Nov. 2 /PRNewswire/ -- The State Public Works Board of the State of California's $407 million lease revenue bonds (The Regents of the University of California) 1992 series A are rated 'A+' by Fitch. The bonds will be sold through negotiation by a syndicate led by Bank of America Nov. 10. The credit trend is uncertain.
 The overall strength of the University of California system and the leased facilities' integral role in its academic programs, along with strong legal features, provide assurance of rental payment. The rating also is based on the state's long term credit prospects, with California facing both economic and financial problems. The long term outlook has declined, as the recession continues to be deeper than expected.
 The budget for fiscal 1993 seeks to address the $2.2 billion general fund deficit accumulated through June 30, 1992, but adjustment to a changing economic and financial environment may have to extend over a period of years. Fiscal recovery also will be complicated by the restrictive effects of initiative requirements. The uncertain trend reflects the state's ongoing economic and financial problems, and the impact they have on the university's fiscal status.
 Bond proceeds will be used to finance 14 projects at seven system campuses. The leased facilities vary in purpose, but are all integral to the university. While this issue about doubles the amount of Public Works Board debt for the university, and hence the annual lease rental expense, this issue is still within the means of the university and the state. Legal provisions are strong, including the Regents' covenant to take all action necessary to include the lease rental payment in its annual budget. The Regents pledges to use all lawfully available funds to make the rental payment, including state appropriations, which are its largest revenue source.
 From a practical standpoint, state funds likely will be the payment source, since state statute requires that the first dollars appropriated by the state to the university be used to pay lease rentals to the board. However, the Regents' ability to make lease rental payments is not contingent upon a state budget enactment, and twice in recent years the Regents has made lease payments without the state having enacted a budget. State appropriations accounted for 34 percent of the university's $6.8 billion fiscal 1992 estimated operating revenue, excluding certain federal research payments.
 -0- 11/2/92
 /CONTACT: Amy S. Doppelt, 212-908-0514, or Claire G. Cohen, 212-908-0552/ CO: ST: California IN: SU: RTG


KD -- NY106 -- 1843 11/02/92 18:25 EST
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Publication:PR Newswire
Date:Nov 2, 1992
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