OREANDA-NEWS. Fitch Ratings assigns a rating of 'AAApre' to the \$634,440,000 state of California (the state) economic recovery bonds, series 2009A, maturing on July 1, 2018 and July 1, 2021, which were refunded on Feb. 3, 2015. The rating applies only to the bonds listed by CUSIP, below.

KEY RATING DRIVERS:
The 'AAApre', Stable Outlook rating is based on the pledge of securities in the irrevocable escrow fund securing the bonds and reflects the lien of the refunded bondholders on the escrow fund and that all amounts have been invested in direct non-callable obligations of the United States. The U.S. full faith and credit is currently rated 'AAA', Stable Outlook by Fitch.

The refunded bonds maturing on July 1, 2018 (5% interest rate) were partially refunded. The other refunded bonds were fully refunded.

Pursuant to an irrevocable escrow certificate, the State Treasurer, as escrow agent, holds a separate special irrevocable escrow fund, established by the State Controller within the State's Treasury, in trust for the benefit of refunded bondholders. All cash and securities held in this fund are pledged irrevocably to the payment when due of interest on the refunded bonds and the payment of principal upon maturity or earlier redemption. In the future, any substitute or additional investments must be limited to non-callable obligations of the U.S. and non-callable, non-prepayable unsubordinated senior obligations of the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Government National Mortgage Association. The refunded bonds maturing on July 1, 2021 will be redeemed on July 1, 2019 at par plus accrued interest. The refunded bonds maturing on July 1, 2018 are escrowed to maturity.

Grant Thornton verified the mathematical accuracy of computations relating to the adequacy of income from escrowed funds to pay debt service requirements of the refunded bonds. These computations were contained in schedules provided to them by Montague DeRose and Associates, LLC, financial advisor for the refunded bonds transaction. According to the Grant Thornton verification report, anticipated receipts from the securities and cash deposited in the escrow fund will be sufficient to pay principal and interest when due at maturity or earlier redemption. Prior to accepting substitute investment securities or disbursing funds, the escrow agent must receive a new report verifying the continued sufficiency of escrowed funds to meet all future payments of principal and interest on the refunded bonds.

RATING SENSITIVITIES:
The rating is exclusively tied to securities backed by the U.S. sovereign creditworthiness and will reflect all changes to that rating.

The 'AAApre', Stable Outlook rating applies to the series 2009A bonds with the following CUSIP numbers:

13067JMY4
13067JKR1
13067JMX6