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Fitch Rates California Infrastructure & Econ Devel Bank 2006 Country Schools VRDBs 'AA-/F1+'.

NEW YORK -- Fitch assigns a rating of 'AA-/F1+' to the $3,000,000 California Infrastructure and Economic Development Bank variable-rate demand revenue bonds (The Country Schools Project), series 2006. The rating is based on the support provided by an irrevocable, direct-pay confirming letter of credit (CLOC) issued by The Bank of New York.

The CLOC provides full coverage of principal, interest equal to 45 days calculated at a maximum rate of 12% based on a year of 365 days, plus purchase price. The underlying irrevocable, direct-pay letter of credit (LOC) issued by First Republic Bank, provides the same coverage as the CLOC. The CLOC will expire on Nov. 2, 2007 with automatic extensions at the confirming bank's option up until Nov. 18, 2016. Fitch's rating will expire on the earliest to occur of: the expiration date of the CLOC; any prior termination of the CLOC; or defeasance of the bonds. The remarketing agent for the bonds is Gates Capital Corporation. The bonds are expected to be delivered on or about Nov. 3, 2006.

The bonds initially bear interest in the weekly interest rate mode, but may be converted to a fixed interest rate mode. While bonds bear interest in the weekly interest rate mode, interest is payable on the first business day of each month, commencing Dec. 1, 2006. Bondholders may tender their bonds for purchase on any business day with seven days' prior notice to the trustee during the weekly rate mode. The bonds are subject to mandatory tender upon conversion to the fixed interest rate mode or on the effective date of any alternate LOC or alternate CLOC. The bonds are subject to mandatory redemption on the fifteenth day preceding the expiration date of the LOC or CLOC. Optional redemption provisions also apply to the bonds.

The trustee will draw on the CLOC only if First Republic Bank fails to honor a draw on its LOC or repudiates its LOC. The CLOC automatically reinstates on the eighth day following an interest drawing unless the trustee receives notice from the bank that such interest component will not be reinstated. The CLOC also reinstates for purchase price draws immediately following reimbursement to the bank.

Bonds proceeds will be used to: pay the cost of, refinance or reimburse the borrower for (1) the acquisitions of property, and (2) the construction and equipping of improvements on such property.

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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Publication:Business Wire
Date:Oct 31, 2006
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