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MOODY'S ASSIGNS 'MIG 2 VMIG 1' RATING TO STATE OF CALIFORNIA VARIABLE RATE DEMAND REVENUE ANTICIPATION NOTES

MOODY'S ASSIGNS 'MIG 2 VMIG 1' RATING TO STATE OF CALIFORNIA VARIABLE RATE
 DEMAND REVENUE ANTICIPATION NOTES
 NEW YORK, Sept. 30 /PRNewswire/ -- Moody's Investors Service today assigned a "MIG 2/VMIG 1" rating to $1.25 billion of State of California variable rate demand 1992-93 revenue anticipation notes maturing April 26, 1993. The State of California is issuing a total of $5.0 billion of notes expected to be sold through negotiation this week. Today's rating action reflects the receipt and review of necessary documentation for the standby purchase agreement which provides liquidity for the notes, and follows the Sept. 25 assignment of ratings to the $3.75 billion fixed rate portion of the offering. The fixed rate notes maturing on Jan. 13 are rated "MIG 1," and those due April 26 and May 12 are rated "MIG 2."
 The "VMIG 1" portion of the rating on the variable rate demand notes reflects the presence of a standby purchase agreement with Morgan Guaranty Trust Company, New York, Canadian Imperial Bank of Commerce, The Bank of Tokyo, Ltd., The Industrial Bank of Japan, Ltd., Union Bank of Switzerland, Swiss Bank Corporation, The Sumitomo Bank, Ltd., The Dai-Ichi Kangyo Bank, Ltd, and Credit Suisse. The SBPA, a several, not joint obligation of the banks, provides for payment of full purchase price on all optional tender dates and results in highest quality security. The "VMIG 1" portion of the rating reflects Moody's evaluation of the creditworthiness of the bank issuing the standby purchase agreement and is based on a structure which ensures both timely payments to note holders and adequate legal protections.
 With respect to final note repayment for each of the series, adequate levels of internally available and borrowable resources, combined with an ability to generate funds from the sale of additional short-term debt, provide high quality note security. For the notes due Jan. 13, substantial borrowable resources, including proceeds from other series of notes not due until later in the fiscal year, insulate note holders from potential weakening in revenue collections and result in the assignment of a "MIG 1" rating. Concerns about economic assumptions underlying the state's cash flow projections and the probable need for a downward revision in the state's revenue forecast introduce uncertainty about expected margins of protection for the later maturities. Those note series due in April and May, when borrowable resources diminish relative to maturing note principal, have margins of protection consistent with the "MIG 2" rating.
 -0- 09/30/92
 CONTACT: George Leung, vice president/managing director, 212-553-0342; Renee Boicourt, vice president, 212-553-0338; or James Dearborn, assistant vice president, 212-553-1910, all of Moody's State Ratings Department CO: STATE OF CALIFORNIA ST: CA -- NY063 -- X607 09/30/92
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Publication:PR Newswire
Date:Sep 30, 1992
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