Fitch Ratings has assigned an 'A' rating to the State Public Works Board (SPWB) of the State of California's $32.465 million in lease revenue bonds, 2007 series D (Department of Corrections and Rehabilitation, California Men's Colony, Wastewater Collection and Treatment Project). The bonds will be sold through negotiation on June 13 by a syndicate led by UBS Investment Bank. The bonds are due June 1, 2008-2032; redemption provisions have yet to be determined. In addition, Fitch has also affirmed the 'A' rating on about $6.1 billion in California lease obligations. The Rating Outlook is Stable.
The 'A' rating on California's (the state) lease debt reflects the state's underlying credit quality, strong lease structure, and the leased assets' essentiality. Debt service is paid from lease rental payments made by the specific leased asset named. Lease rental payments are appropriated annually by the state legislature; the lessee is required by law to use the first funds appropriated to it to make lease payments along with other rental amounts supporting existing Public Works Board debt.
