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Fitch Initiates Outlooks on U.S. State Appropriation Bonds; Upgrades Certain State Credits.

NEW YORK -- Fitch Ratings assigns initial Rating Outlooks of Stable to a number of U.S. state appropriation bonds (see list at end). This is consistent with the Stable Rating Outlooks on the related state general obligation (GO) ratings. Rating Outlooks indicate the likelihood of a rating change over the next one to two years.

In conjunction with this comprehensive review of U.S. state appropriation bonds, Fitch upgrades the ratings on the following 16 credits. The Rating Outlook on all upgraded credits is Stable. The upgrades are undertaken to more closely align the state's appropriation-backed ratings with the state's GO bond rating. Generally, appropriation-backed debt is rated one notch below the GO rating. Greater distinctions can be made in some cases, including for certain sports, entertainment, or convention center projects. Unique structural protections can allow for a rating on par with the GO.

Alaska

--State of Alaska state lease obligations for a seafood and food safety laboratory and a virology lab facility upgraded to 'AA-' from 'A+';

--State of Alaska state certificates of participation upgraded to 'AA-' from 'A+';

--Municipality of Anchorage state lease revenue bonds (correctional facility) upgraded to 'AA-' from 'A+'.

Florida

--Florida Department of Management Services state lease obligations upgraded to 'AA' from 'AA-'.

Kentucky

--Kentucky State Property & Buildings Commission state lease obligations (Kentucky State Fair, Project No. 81) upgraded to 'A+' from 'A'.

Maryland

--Maryland Department of Transportation state lease obligations (Calvert Street Parking Garage) upgraded to 'AA+' from 'AA';

--Maryland Department of Transportation state certificates of participation upgraded to 'AA' from 'AA-';

--Maryland Economic Development Corporation (MEDCO) state lease obligations (BWI airport) upgraded to 'AA' from 'AA-'.

The payments for lease obligations for the Calvert Street Parking Garage are derived from direct general fund appropriations. The payments for lease obligations and certificates of participation issued by the Maryland Department of Transportation and MEDCO are intended to derive from (but are not limited to) appropriations from the state's transportation trust fund.

Massachusetts

--North Transportation Improvements Association lease revenue bonds upgraded to 'AA-' from 'A+'.

Minnesota

--St. Paul Port Authority state lease obligations for state office buildings upgraded to 'AA+' from 'AA'

New York

--New York Local Government Assistance Corporation (LGAC) bonds upgraded to 'AA-' from 'A+';

--New York City Sales Tax Asset Receivable Corporation (STAR) sales tax asset revenue bonds upgraded to 'AA-' from 'A+';

--New York State Thruway Authority highway and bridge trust fund bonds upgraded to 'AA-' from 'A+'.

The upgrades primarily reflect the strength of the incentive to appropriate for the three credits. LGAC and STAR bonds are backed by one cent of the state's sales tax, and the Thruway trust fund bonds are payable from dedicated highway and bridge trust fund revenues. Although bond payment is contingent upon legislative appropriation in each case, in the event of non-appropriation for any of the credits the state would be unable to receive revenues held by the LGAC trust fund, which receives the one cent of the state's sales tax and contributed about $2.2 billion to the general fund in fiscal 2006. With this upgrade, the ratings on the LGAC, STAR and Thruway trust fund bonds are now on par with the state's GO rating as well as the rating on the state's personal income tax (PIT) bonds, which also include a strong revenue impoundment provision in the event of non-appropriation.

Rhode Island

--State of Rhode Island & Providence Plantations state lease participation certificates upgraded to 'AA-' from 'A+'.

South Carolina

--South Carolina Budget and Control Board state facilities installment purchase revenue bonds (Department of Public Safety Project) upgraded to 'AA+' from 'AA'.

South Dakota

--South Dakota Building Authority state lease obligations upgraded to 'AA-' from 'A+'.

The following credits are assigned Stable Rating Outlooks. In addition, Fitch affirms the underlying ratings:

California

--California Board of Public Works state lease obligations 'A';

--California Franchise Tax Board state lease obligations 'A';

--East Bay State Building Authority state lease obligations 'A';

--Los Angeles State Building Authority state lease obligations 'A';

--Oakland State Building Authority state lease obligations 'A';

--Riverside County Financing Authority state lease obligations 'A';

--Sacramento City Financing Authority state lease obligations 'A';

--San Bernardino Joint Powers Financing Authority state lease obligations 'A';

--San Francisco State Building Authority state lease obligations 'A';

--Infrastructure & Economic Development Bank state school fund apportionment lease revenue bonds 'A';

--Golden State Tobacco Asset Securitization Corporation tobacco settlement asset-backed bonds, series 2005A (state appropriation backstop) 'A';

--State of California judgment trust certificates of participation 'A-'.

Connecticut

--Connecticut Development Authority state appropriation debt 'AA-';

--Connecticut Resources Recovery Authority state appropriation debt 'AA-';

--City of Waterbury state appropriation debt 'AA-'.

--Capital City Economic Development Authority parking and energy fee revenue bonds (ultimately backed by state contract) 'AA-';

--University of Connecticut general obligation bonds (state debt service commitment) 'AA-'.

Idaho

--Idaho State Building Authority state lease obligations 'AA-'.

Indiana

--Indiana Finance Authority state lease obligations 'AA'.

Kansas

--Kansas Development Finance Authority state lease obligations, 'AA-'.

Kentucky

--Kentucky State Property and Buildings Commission state lease obligations 'AA-';

--Kentucky Asset/Liability Commission's (ALCo) state lease obligations (Bluegrass Station Project) 'A+'.

Maryland

--Maryland Stadium Authority state lease obligations 'AA'.

Michigan

--Michigan State Building Authority state lease obligations 'A+'.

Missouri

--State of Missouri certificates of participation 'AA+',

--Missouri Board of Public Buildings special obligation and state building bonds 'AA+';

--Missouri Development Finance Board leasehold revenue bonds 'AA+';

--Southeast Missouri Correctional Facilities, Inc. state lease revenue bonds 'AA+';

--Missouri Health and Educational Facilities Authority (University of Missouri-Columbia Arena Project) educational facilities revenue bonds 'AA+'.

--Missouri Regional Convention & Sports Complex Authority state appropriation bonds 'AA'.

Nevada

--Nevada Department of Administration lease obligations (capitol complex) 'AA';

--University and Community College System of Nevada tax lease revenue bonds 'A-'.

New Jersey

--State of New Jersey state lease/appropriation obligations 'A+';

--New Jersey Economic Development Authority state lease/appropriation obligations 'A+';

--New Jersey Educational Facility Authority state lease/appropriation obligations 'A+';

--New Jersey Sports & Exhibition Authority state lease/appropriation obligations 'A+';

New Jersey Health Care Facilities Finance Authority state lease/appropriation obligations 'A+';

--Essex County state lease/appropriation obligations 'A+';

--New Jersey Economic Development Authority state pension funding bonds 'A+'

--New Jersey Transportation Trust Fund Authority transportation system bonds 'A+';

--Garden State Preservation Trust open space and farmland preservation bonds 'AA-'.

New York

State appropriation debt (state lease, state service contract, certificates of participation, etc.) 'A+':

--State of New York

--Dormitory Authority of the State of New York (DASNY);

--Empire State Development Corporation/Urban Development Corporation (ESDC/UDC);

--New York State Energy Research & Development Authority (NYSERDA);

--New York Environmental Facilities Corporation (EFC);

--New York State Housing Finance Agency (HFA);

--Metropolitan Transportation Authority (MTA);

--New York State Thruway Authority;

--Dormitory Authority of the State of New York secured hospital revenue bonds 'A+';

--Dormitory Authority of the State of New York municipal health facilities lease revenue bonds (New York City), court facilities lease revenue bonds (New York City), Fashion Institute of Technology revenue bonds 'A';

--Dormitory Authority of the State of New York personal income tax (PIT) bonds 'AA-';

--Empire State Development Corporation personal income tax (PIT) bonds 'AA-';

--New York Environmental Facilities Corporation personal income tax (PIT) bonds 'AA-';

--New York Housing Finance Agency personal income tax (PIT) bonds 'AA-';

--New York State Thruway Authority personal income tax (PIT) bonds 'AA-'.

North Carolina

--North Carolina Infrastructure Finance Corporation lease obligations and certificates of participation 'AA+'.

Ohio

--State of Ohio state lease obligations 'AA';

--Ohio Building Authority state lease obligations 'AA';

--Ohio Public Facilities Commission state lease obligations 'AA'.

Oregon

--Oregon Department of Administrative Services state certificates of participation 'A+'.

Pennsylvania

--Pennsylvania Commonwealth Financing Authority revenue bonds (backed by state service contract) 'AA-'.

Rhode Island

--State of Rhode Island & Providence Plantations Refunding Bond Authority state public projects revenue bonds 'AA-';

--Rhode Island Convention Center Authority convention center and civic center revenue bonds 'AA-'.

Tennessee

--Tennessee School Bond Authority higher educational facilities second program bonds 'AA'.

Virginia

--Commonwealth of Virginia state appropriation bonds 'AA+';

--Virginia College Building Authority state appropriation bonds 'AA+';

--Virginia Public Building Authority state appropriation bonds 'AA+';

--Virginia Public School Authority state appropriation bonds 'AA+';

--Virginia Port Authority state appropriation bonds 'AA+';

--Fairfax County Economic Development Authority state appropriation bonds 'AA+';

--Norfolk Industrial Development Authority state appropriation bonds 'AA+';

--Newport News Industrial Development Authority state appropriation bonds 'AA+';

--Big Stone Gap Redevelopment & Housing Authority state appropriation bonds 'AA+';

--Virginia Biotechnology Research Park Authority state appropriation bonds 'AA+';

--Commonwealth of Virginia Transportation Board transportation revenue bonds 'AA+'.

West Virginia

--West Virginia Economic Development Authority (EDA) state appropriation bonds 'A+';

--West Virginia School Building Authority (SBA) state appropriation bonds 'A+';

--West Virginia State Building Commission (SBC) state appropriation bonds 'A+'.

Wisconsin

--State of Wisconsin master lease certificates of participation 'A+';

--State of Wisconsin general fund annual appropriation (pension) bonds 'A+'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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