OREANDA-NEWS. Fitch Ratings has assigned a rating of 'AAApre' to the $815,790,000 State of California (State) various purpose general obligation bonds (the 'refunded bonds') as follows:

--Dated Nov. 1, 2006 and maturing Oct. 1, 2031; and

--Dated June 1, 2007 and maturing June 1, 2018-2021, 2032 and 2037.

The Rating Outlook is Stable.

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 trust fund and that all amounts have been invested in State and Local Government Securities (SLGS), which are direct non-callable obligations of the United States. The U. S. full faith and credit is currently rated 'AAApre'; Stable Outlook by Fitch.

Fitch also maintains an unenhanced rating of 'A+'; Stable Outlook on the bonds based on the GO pledge of the state's full faith and credit (rated 'A+'; Stable Outlook). The bonds remain a general obligation of the state even though the source of repayment is expected to be the securities in the escrow deposit fund, further described below. For more information on the State of California GO rating, see the press release "Fitch Rates California $1.5B GOs 'A+'; Outlook Stable" dated Apr. 6, 2016 available at 'www. fitchratings. com'.

The bonds were refunded on April 28, 2016 with proceeds of the State's tax-exempt various purpose general obligation refunding bonds. The ratings apply to the refunded bonds listed by CUSIP numbers, below. The refunded bonds dated Nov. 1, 2006 will be redeemed on Oct. 1, 2016 and the refunded bonds maturing June 1, 2007 will be redeemed on June 1, 2017, all at par plus accrued interest.

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 the 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 redemption. In the future, any substitute or additional investments are limited to non-callable obligations of the United States.

A firm of certified public accountants 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 Public Resources Advisory Group, financial advisor to the State. According to the verification report, the anticipated receipts from the securities and cash deposited will produce amounts necessary to provide for the timely payment of interest when due and principal upon redemption. Prior to accepting substitute investment securities or disbursing funds to the State, the escrow agent must receive a new report of independent certified public accountants verifying the continued sufficiency of escrowed funds to meet all future payments of principal and interest on the refunded bonds.