Fitch Affirms CalPERS Credit Enhancement Program 'AAA/F1+'

Business Wire, Feb 7, 2008

CHICAGO -- Fitch Ratings affirms its 'AAA/F1 ' rating to the credit enhancement program (CEP) sponsored by the California Public Employees' Retirement System (CalPERS). The Rating Outlook is Stable. The CEP provides letters of credit (LOCs) and liquidity enhancement for municipal issuers. Upon request by the issuer, Fitch will rate debt obligations backed by the credit enhancement of CalPERS 'AAA/F1 '.

The 'AAA' rating reflects CalPERS' significant resources available to support CEP commitments up to the program's maximum limit of $5 billion. As of Dec. 31, 2006, CalPERS investment portfolio totaled $211.2 billion, with CEP commitments totaling $684 million. The rating also reflects CalPERS' diversified sponsorship by over 2,600 governmental entities across the state and a diversified and prudent asset allocation plan for investment management. CalPERS' primary defined benefit plan, which totals $251 billion, is 87.1% funded (actuarial basis).

Written policies and controls adopted by CalPERS' board and implemented by CEP management further strengthen the program. General obligation secured issues account for over 50% of enhancment commitments. The CEP program incorporates single risk, geographic, and sector limitations, in addition to underlying credit standards of at least investment grade. The weighted average life of the CEP commitments is approximately (3.7) years.

The 'F1 ' short-term rating reflects the more than $1.4 billion in average cash balances that are available to cover debt service payments on direct-pay LOCs and liquidity draws on standby lines of credit or other liquidity enhancement.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 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.