Fitch Ratings has assigned an 'AAA' rating to $740 million in state of Georgia general obligation (GO) bonds, consisting of the following: --$520.1 million GO series 2012A; --$79.9 million GO series 2012B (federally taxable); --$142 million GO refunding series 2012C.

Precise par amounts for the GO refunding series 2012C will be determined at the time of sale, expected via competitive bid on June 20. Series 2012A and 2012B will be offered via competitive bid on June 21.

Fitch also affirms the ratings of outstanding state GO and related bonds of the state as detailed at the end of this release.

The Rating Outlook is Stable.

KEY RATING DRIVERS --LOW DEBT: The state's debt burden is on the low end of the moderate range, and overall debt management is conservative. Amortization of principal is rapid.

Pensions are well-funded.

--FISCALLY CONSERVATIVE: The state has a long history of conservative revenue estimation and balanced operations, and has consistently taken timely action to address fiscal weakness. After several years of recession-related fiscal challenges, the state is making progress in rebuilding balances.

--DIVERSIFYING ECONOMY: Despite the currently slow economic recovery, the state's economy has grown rapidly and diversified over time.

SECURITY The bonds are general obligations of the state of Georgia, secured by a pledge of the state's full faith and credit.

CREDIT PROFILE The longstanding 'AAA' rating and Stable Outlook on Georgia's GO bonds reflect its conservative debt management, a proven willingness and ability to support fiscal balance, and a diversified economy. The state took repeated action during the last recession to maintain fiscal balance through steep spending cuts, use of federal stimulus, and draws from its rainy day fund, the revenue shortfall reserve (RSR). The state's debt profile is conservative and its debt burden is moderate as a percentage of personal income, with rapid amortization of principal. The economy has grown rapidly in recent decades, although performance weakened significantly during the last recession, beyond national averages, and recovery has been slow.

Georgia has a demonstrated commitment to budgetary balance and maintaining flexibility in the form of RSR balances. Strong revenue performance through fiscal 2007 enabled the RSR balance to reach $1.5 billion (8.2% of net revenues) by fiscal year 2007. Revenues faltered between fiscal 2008 and fiscal 2010, requiring allotment holdbacks and spending cuts, use of federal stimulus and draws from the RSR to ensure continued balance. Although drawn down to a low of $103 million (0.62% of net revenues) in fiscal 2009, spending restraint and conservative revenue estimating have returned the fiscal 2011 balance to $328 million (1.87% of net revenues), net of mid-year school funding.

Given the expiration of federal stimulus funds at the end of fiscal 2011, Georgia's fiscal 2012 budget anticipated modest tax revenue improvement while implementing 7% agency spending reductions to ensure balance. The state's fiscal 2012 amended budget forecasts tax revenues to rise 4.4% over fiscal 2011 figures, to $16.1 billion, driven largely by personal income tax growth. Actual collections have outperformed expectations, with total taxes and other fee collections for fiscal year 2012 through May up 5.1% from the prior fiscal year.

Fiscal 2012 appropriations of $18.5 billion are up only 2.5% from the prior year, with sizable healthcare-related spending growth offsetting the expiring stimulus aid and an overall reduction to higher education spending.

The fiscal 2013 budget, adopted in March 2012, assumes tax revenue growth of 5.3%, to $17 billion, a figure which incorporates a net $49 million in tax measures lowering collections. As with recent years, the state incorporated cuts across most program spending categories, although education spending will grow.

Total appropriations grow 4.5% from fiscal 2012, to $19.3 billion.

Most of the state's tax-supported debt is in the form of GO or guaranteed revenue bonds, and amortization of principal is rapid, with 70% due in 10 years.

Other outstanding obligations include $1.2 billion in grant anticipation revenue (GARVEE) bonds and capital leases. Including the current sale, debt ratios remain moderate at 3% of 2011 state personal income. Debt management includes policy targets for outstanding debt by personal income and per capita, as well as debt service to prior year receipts.

The state's major pension systems covering both state employees and teachers have historically been well-funded, benefiting from consistent funding of annual required contributions. As of the June 30, 2011 valuation, system-wide funded ratios for the state employees and teachers plans were reported at 76% and 84%, respectively. Using Fitch's more conservative 7% discount rate assumption, the state employees and teachers plans would be funded at 75.9% and 81.3%, respectively as of June 30, 2010, based on the systems' June 30, 2011 comprehensive annual financial reports, the most recent available. On a combined basis, the state's net tax-supported debt and Fitch-adjusted pensions would total 4.5% of 2011 personal income, well below the 6.6% median for U.S. states rated by Fitch.

The state's diversified economy has grown rapidly over time, with its largest metro area, Atlanta, positioned as a key business center and transport hub. The recession was more severe in the state than the nation overall and a return to growth remains uneven, with overall growth tempered by ongoing weakness in certain sectors, notably nondurable manufacturing and construction. Between 2007 and 2010, employment declined 7.3% in the state, more severe than the 5.6% employment loss recorded nationally during the same period. Unemployment also rose rapidly, to 10.2% in 2010, from 4.6% in 2007.

Economic recovery is underway, although performance remains uneven, with 2011 employment growth roughly matching the U.S. while May 2012 employment rose 0.9%, compared to a 1.4% gain nationally. Unemployment remains elevated, at 8.9% in May 2012 compared to 8.2% nationally. The state's quarterly personal income rose 4.3% on an annual basis in the fourth quarter of 2011, compared to 4.6% nationally. Based on preliminary 2011 data, personal income per capita equaled 86.7% of the U.S. level, ranking Georgia 39th among the states.

In addition, Fitch affirms the following: --Approximately $9 billion in outstanding state GO and guaranteed revenue bonds, at 'AAA'; --Approximately $35 million in Development Authority of Clayton County revenue bonds (TUFF Archives LLC-Secretary of State of Georgia Project), Series 2012, at 'AA'.