Fitch Rates $526,725,000 California GO Bonds 'AAApre'; Stable Outlook

Fitch Ratings has assigned a rating of 'AAApre' with a Stable Outlook to the following bonds:

--$89,050,000 State of California (State) Various Purpose General Obligation (GO) Bonds dated March 1, 2005, maturing March 1, 2016 - March 1, 2020 and March 1, 2022;

--$106,755,000 State Various GO Refunding Bonds dated March 1, 2005, maturing March 1, 2025 - March 1, 2030 and March 1, 2033 and March 1, 2035; and

--$330,920,000 State Various Purpose GO Bonds dated June 1, 2005, maturing June 1, 2024 - June 1, 2029, and June 1, 2031, June 1, 2033, and June 1, 2035.

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 funds 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 'AAA', 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 by Fitch). 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 press release 'Fitch Assigns 'A' Rating to $2.3 Billion California GOs; Outlook Stable' dated Sept. 10, 2014 available at 'www.fitchratings.com'.

The State GO bonds dated March 1, 2005 were partially refunded, and the State GO Refunding Bonds dated March 1, 2005 and the State GO Bonds dated June 1, 2005 were fully refunded, all on Oct. 7, 2014 with portions of the proceeds of the State's $987,585,000 Various Purpose General Obligation Refunding Bonds. The ratings apply to the bonds listed by CUSIP numbers, below.

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 may also include senior unsubordinated direct obligations of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation that are non-callable and non-prepayable. In addition, in accordance with the provisions of the escrow certificate, up to $5,000 may be held in the State's Surplus Money Investment Fund. The bonds dated March 1, 2005 will be redeemed at par on March 1, 2015 and the bonds dated June 1, 2005 will be redeemed at par on June 1, 2015.

Grant Thornton verified the mathematical accuracy of computations relating to the adequacy of income from escrowed funds and securities to pay debt service requirements of the refunded bonds. These computations were contained in schedules provided to them by Wells Fargo Securities, the underwriter for the refunding bonds. According to the Grant Thornton verification report, the anticipated receipts from the SLGS and cash deposited in the escrow fund will produce amounts necessary for timely payment of the principal and interest on the 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 the refunded bonds.

RATING SENSITIVITIES

The rating is exclusively tied to the U.S. sovereign creditworthiness and will reflect all changes to that rating.

The 'AAApre' rating applies to the bonds with the following CUSIP numbers:

13063CNT3

13063CNU0

13063CNV8

13063CNW6

13063CNX4

13063CNY2

13062PP97

13062PQ21

13062PQ39

13062PQ47

13062PQ54

13062PQ62

13062T6G4

13062PQ88

13062RKW7

13062RKX5

13062RKY3

13062RKZ0

13062RLA4

13062RLB2

13062RLC0

13062RLD8

13062RLE6

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'U.S. Municipal Structured Finance Criteria' (Feb. 24, 2014);

--'Guidelines for Rating Prerefunded U.S. Municipal Bonds'(Dec. 2, 2013).

Applicable Criteria and Related Research:

U.S. Municipal Structured Finance Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=736618

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=906214

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.