Fitch Rates Louisiana GO Variable Rate Demand Rfdg Bonds Series 2008-A 'AAA/F1+'

Business Wire,  July 7, 2008  

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NEW YORK -- Fitch Ratings assigns an 'AAA/F1+' rating to the $200,000,000 State of Louisiana general obligation variable rate demand refunding bonds series 2008-A. The rating is based on the direct-pay letter of credit (LOC) provided by BNP Paribas, San Francisco Branch, supporting the bonds and the application of Fitch's joint probability methodology. The long-term rating assigned to the bonds is based jointly on the underlying rating assigned to the bonds (currently rated 'A+' by Fitch), and the support provided by the LOC. The short-term 'F1+' rating is based solely on the LOC. BNP Paribas is rated 'AA/F1+'. For more information on the underlying credit please see the Fitch press release, dated July 3, 2008, available on the Fitch web site www.fitchratings.com.

The long-term rating is based on Fitch's methodology which considers the joint probability of the failure of both a rated obligor and a bank LOC provider. The methodology results in a rating that is up to two notches higher than the stronger of the two credits if the following conditions are met: 1) both entities have a rating of 'A' or higher; 2) the transaction is structured such that payments from both the municipal issuer and the bank are in the flow of funds and both entities would have to fail to perform before the bonds defaulted; and 3) the credit of the bank and the rated obligor have no more than a medium degree of correlation. Fitch has determined a low degree of correlation which results in a rating of 'AAA/F1+' for the bonds. If either the underlying bond rating or the bank rating were downgraded to 'A-' or lower, the joint probability could no longer be applied, and the long-term rating for the bonds would then be adjusted to the higher of the bank rating and the underlying bond rating.

The bank is obligated to make payments of principal of and interest on the bonds upon maturity, redemption, as well as purchase price for tendered bonds. The ratings will expire upon the earliest of: July 16, 2011, the initial stated expiration date of the LOC, unless such date is extended; any prior termination of the LOC; or defeasance of the bonds. The LOC provides full coverage of principal plus an amount equal to 57 days' interest at a maximum rate of 12% based on a year of 365 days and purchase price for tendered bonds, while in the weekly rate mode. The Underwriter and Remarketing Agent for the bonds is Morgan Keegan & Company, Inc. The sale is expected to be on or about July 16, 2008.

The bonds initially bear interest at a weekly rate and may be converted to a daily, commercial paper, auction, long-term rate, or alternative variable rate mode. While the bonds bear interest in the weekly rate mode, interest payments are on the first Wednesday of each month commencing August 6, 2008. Holders may tender their bonds on any business day, provided the tender agent is given at least seven calendar days' prior notice of the purchase. The bonds are subject to mandatory tender: upon conversion of the interest rate; upon expiration, substitution or termination of the LOC; and upon trustee's receipt of notice from the LOC bank of an event of default under the reimbursement agreement, or non-reinstatement of the interest component of the LOC. Optional redemption provisions also apply to the bonds.

The proceeds of the bonds will be used to currently refund the state's outstanding General Obligation Gulf Tax Credit bonds, series 2006A, on July 18, 2008.

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.

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