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TMCNet:  Fitch Rts State Pub Works Bd Lease Revs Bnds (Univ of CA) 2005 C, D& L 'AAApre'; Watch Negative

[December 20, 2013]

Fitch Rts State Pub Works Bd Lease Revs Bnds (Univ of CA) 2005 C, D& L 'AAApre'; Watch Negative

NEW YORK --(Business Wire)--

Fitch Ratings has assigned a rating of 'AAApre', Rating Watch Negative to the following bonds:

--$102,165,000 State Public Works Board of the State of California (SPWB) Lease Revenue Bonds (The Regents of the University of California) 2005 Series C (University of California Institute Projects), maturing April 1, 2014 - April 1, 2030;

--$279,825,000 SPWB Lease Revenue Bonds (The Regents of the University of California) 2005 Series D (Various University of California Projects), maturing May 1, 2014 - May 1, 2030;

--$127,750,000 SPWB Lease Revenue Bonds (The Regents of the University of California) 2005 Series L (University of California Research Projects), maturing Nov. 1, 2014 - Nov. 1, 2030.

KEY RATING DRIVERS:

The rating of 'AAApre', Rating Watch Negative is based on the pledge of securities in the escrow deposit funds securing each respective series of bonds and reflects the lien of the refunded bondholders on the escrow trust funds and that all amounts have been invested in: (1) direct non-callable obligations of the United States; or (2) non-callable senior obligations of Freddie Mac (FHLMC). The U.S. full faith and credit is currently rated 'AAA', Rating Watch Negative by Fitch. As the ratings of FHLMC are currently linked to the U.S. sovereign rating, any rating action on the U.S. sovereign rating will directly affect the rating on the bonds. Should Fitch's view of the strength of government support for FHLMC be reduced or downgraded, the rating of FHLMC may be delinked from the U.S. sovereign rating and may result in negative pressure on rating of the bond series supported by those securities.

The bonds were refunded on Oct. 2, 2013 with portions of the proceeds of the $2,458,550,000 The Regents of the University of California General Revenue Bonds 2013 Series AI, Series AJ (Taxable), Series AK and Series AL (Variable Rate Demand Bonds), as well as amounts released from various accounts associated with the refunded bonds. The escrow trust fund securities are invested in: direct non-callable obligations of the United States and FHLMC securities for all three series of bonds. The ratings apply to the bonds listed by CUSIP numbers, below.

Pursuant to three separate irrevocable escrow agreements, the State Treasurer, as escrow agent, holds separate special irrevocable escrow accounts, established by the State Controller within the State's Treasury, in trust for the benefit of the refunded bondholders for each respective series. All cash and securities held in the accounts 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 investments are limited to direct non-callable obligations of the United States and obligations of Fannie Mae or FHLMC not callable prior to maturity. The 2005 Series C bonds will be redeemed at par on April 1, 2015, with the exception of the April 1, 2014 maturity which will be paid at maturity; the 2005 Series D bonds will be redeemed at par on May 1, 2015, with the exception of the May 1, 2014 maturity which will be paid at maturity; and the 2005 Series L bonds will be redeemed at par on Nov. 1, 2015, with the exception of the Nov. , 2014 maturity which will be paid at maturity.

Causey Demgen & Moore P.C. verified the mathematical accuracy of computations relating to the adequacy of income from escrowed funds to pay debt service requirements of each respective series of refunded bonds. These computations were contained in schedules provided to them by Barclays Capital, the underwriter for the refunding bonds. According to the Causey Demgen & Moore verification report, the securities and cash deposited will produce amounts necessary for timely payment of the principal and interest on each respective series of refunded bonds. Prior to accepting substitute or additional investment securities or disbursing funds to the State, 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 each series of refunded bonds.

RATING SENSITIVITIES:

The rating is currently exclusively tied to the U.S. sovereign creditworthiness and will reflect all changes to that rating. Should Fitch's view of the strength of government support for FHLMC be reduced or downgraded, the rating of FHLMC may be delinked from the U.S. sovereign rating and may result in negative pressure on the bond series supported by those securities.

The rating of 'AAApre', Rating Watch Negative applies to the bonds with the following CUSIP numbers:

2005 Series C

130684TW3

130684TX1

130684TY9

130684TZ6

130684UA9

130684UB7

130684UC5

130684UD3

130684UE1

130684UF8

130684UG6

130684UH4

130684UJ0

130684UK7

130684UL5

130684UM3

2005 Series D

130684VH3

130684VJ9

130684VK6

130684VL4

130684VM2

130684VN0

130684VP5

130684VQ3

130684VR1

130684VS9

130684VT7

130684VU4

130684VV2

130684VW0

130684VX8

130684VY6

130684VZ3

130684WA7

130684WB5

2005 Series L

130684K36

130684K44

130684K51

130684K69

130684K77

130684K85

130684K93

130684L27

130684L35

130684L43

130684L50

130684L68

130684L76

130684L84

130684L92

130684M26

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

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

--'Guidelines for Rating Prerefunded U.S. Municipal Bonds', December 2, 2013.

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

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

Guidelines for Rating Prerefunded U.S. Municipal Bonds

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=724818

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=812767

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 (News - Alert) 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.


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