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Fitch to Confirm S-T Rating of 'F1+' on California GO CP Notes Series A-1 & B-1

February 19, 2014



NEW YORK--(BUSINESS WIRE)-- On the effective date of Feb. 20, 2014, Fitch Ratings will confirm the short-term rating of 'F1+' assigned to the State of California's general obligation tax-exempt commercial paper notes series A-1 and taxable commercial paper Series B-1 (notes). A maximum of $500,000,000 aggregate principal amount of authorized notes may be outstanding at any given time for both series.

The rating action is in connection with (i) the substitution of the current irrevocable letter of credit (LOC) provided severally by Wells Fargo Bank, N.A. (Wells, rated 'AA-/F1+', stable outlook), and CalSTRS (rated 'AA+/F1+', Stable Outlook) with a substitute LOC to be provided by Wells and (ii) the reoffering of the notes.

KEY RATING DRIVERS:

On the effective date, the 'F1+' rating on the notes will be confirmed based on the support provided by an irrevocable direct-pay substitute LOC to be provided Wells. The substitute LOC provides coverage for the principal amount of the notes and interest on the maturity dates of the notes.

The short-term rating on the notes will expire on the earlier of Feb. 17, 2017, the expiration date of the substitute LOC, unless such date is extended, or upon any prior termination of the substitute LOC.

U.S. Bank National Association will continue as the Issuing and Paying Agent (IPA) for the notes, and as IPA, is directed to request an advance under the substitute LOC whenever proceeds of the sale of rollover notes or long-term bonds are insufficient to pay maturing notes, the IPA is directed to request an advance under the LOC to pay principal and interest on maturing notes. The substitute LOC provides sufficient coverage for the principal amount of notes plus 90 days of interest calculated at 11% based upon a 365 day year.

All notes will be issued at par, with interest due at maturity. Following the occurrence of an event of default under the LOC, Wells may direct the IPA to immediately stop the issuance of any additional notes. In such event, the substitute LOC will expire after all the notes supported by such LOC mature and have been paid from funds drawn on the substitute LOC. The dealers for the notes are Barclays Bank, PLC, Merrill Lynch, Morgan Stanley, Ramirez & Co., Inc. and Wells Fargo Bank, National Association.

RATING SENSITIVITIES:

The rating is exclusively tied to the short-term rating that Fitch maintains on the substitute bank providing the LOC and will reflect all changes to that rating.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria', Feb. 27, 2013;

--'Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support', Jan. 27, 2014

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=701570

Rating Guidelines for Variable-Rate Demand Obligations and Commercial Paper Issued with External Liquidity Support

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=730736

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Primary Analyst

Mario Civico, +1 212-908-0796

Senior Director

Fitch Ratings, Inc.

One State Street Plaza

New York, NY 10004

or

Secondary Analyst

Linda Friedman, +1 212-908-0727

Senior Director

or

Committee Chairperson

Trudy Zibit, +1 212-908-0689

Managing Director

or

Media Relations, New York

Elizabeth Fogerty, +1 212-908-0526

elizabeth.fogerty@fitchratings.com

Source: Fitch Ratings


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