OREANDA-NEWS. Fitch Ratings has assigned an 'AA+' rating to \$362.225 million state of Oregon's general obligation (GO) bonds, consisting of the following:

--\$173.41 million 2015 series F (tax-exempt);
--\$4.975 million 2015 series G (federally taxable);
--\$146.26 million 2015 series H (tax-exempt refunding);
--\$37.58 million 2015 series I (tax-exempt refunding).

The bonds are expected to sell via negotiation the week of March 2, 2015. The par amount of the bonds is subject to change based on current market conditions.

The Rating Outlook is Stable.

SECURITY

The bonds are general obligations of the state of Oregon, with the full faith and credit of the state pledged to bond repayment.

KEY RATING DRIVERS

STRONG FINANCIAL MANAGEMENT OFFSETS REVENUE VOLATILITY: State finances are heavily dependent on the personal income tax (PIT), a volatile revenue source that declined sharply during the recession, and has since shown steady growth. The state's management reviews revenue and economic forecasts quarterly and takes measures as necessary to maintain balance. State reserve levels were drawn upon among balancing measures in the downturn, but the state is committed to rebuilding reserves in the current, and future, biennia.

DIVERSE ECONOMY WITH SELECT CONCENTRATIONS: The computer and manufacturing sectors play an above-average role in Oregon's economy, which is especially influenced by international trade patterns. While recent employment growth has been well above the national average, solid growth in the state's labor force as more entrants seek employment has increased the state's unemployment rate to 121% of the national average.

MODERATE LIABILITY BURDEN: Debt levels are above average for a U.S. state but are only a moderate burden on resources. On a combined basis, the burden of the state's net tax-supported debt and unfunded pension obligations approximates the median for U.S. states. OPEB obligations are small.

VOTER INITIATIVES CAN LIMIT FLEXIBILITY: A dynamic voter initiative process can have an impact on state finances.

RATING SENSITIVITIES

The rating is sensitive to shifts in fundamental credit characteristics, including the state's proactive financial management and commitment to reserve funding.

CREDIT PROFILE

Oregon's 'AA+' GO bond rating reflects a diverse economy with some concentration in computer and electronic manufacturing and agricultural products, moderate debt levels, the state's record of prompt actions to maintain financial flexibility in challenging revenue environments, and the maintenance of financial cushion to provide protection from revenue volatility.

Strong financial management is critical to the rating given a revenue structure largely dependent on the cyclical PIT, exposure to voter initiatives that can have negative fiscal impacts, and constitutional 'kicker' provisions that require the return of surplus revenues to taxpayers. Corporate revenue in excess of the revenue forecast is now directed to elementary and secondary education per approval of a 2012 voter initiative.

The state's debt levels are above average but an improved liability situation results in these obligations remaining a moderate burden on resources. The currently offered 2015 series F and G bonds will fund capital projects at multiple state departments and institutions of higher education. The 2015 series H and I bonds will refund outstanding state GO bonds for debt service savings.