FITCH RATES NEW HAMPSHIRE'S $44MM GO BONDS 'AA+'

Fitch Ratings-New York-08 July 2010: Fitch Ratings has assigned an 'AA+' rating to the State of
New Hampshire's general obligation (GO) refunding bonds consisting of:

--$44.345 million 2010 series B.

The bonds are expected to sell July 14 via competitive sale.

Fitch also affirms the 'AA+' rating on New Hampshire's approximately $823 million outstanding
GO bonds, including bonds of the Pease Development Authority guaranteed by the state. The
Rating Outlook is Stable.

RATING RATIONALE:
--New Hampshire's economy had been strong and resilient when compared to surrounding states
coming into the economic downturn and strong growth is expected to return as the national
economy recovers.
--With no sales or income tax, the state's finances are dependent on an unusual mix of taxes -
business taxes, real estate transfer taxes, cigarette and alcohol taxes, etc., which are economically
sensitive and have underperformed through the economic downturn.
--The state takes timely action to maintain budgetary balance. State actions to balance the budget
include various revenue increases, expenditure reductions, fund transfers and bond issuance in lieu
of paygo school building aid.
--Debt levels are low, amortization is rapid, and net tax-supported debt is entirely general
obligation. Pension funding has declined dramatically over the past ten years, and may represent a
future spending pressure.

KEY RATING DRIVER:

State's continued ability to meet funding needs and maintain balanced financial operations within a
limited revenue system that is susceptible to business cycles.

SECURITY:
General Obligation, full faith and credit of the state of New Hampshire

CREDIT SUMMARY:
The 'AA+' reflects New Hampshire's economic strength and resiliency and conservative debt
position. New Hampshire's economy compared favorably to surrounding states coming into the
economic downturn. These strengths are offset partly by the state's dependence on a variety of
volatile taxes, which have not performed well in the current economic environment.

New Hampshire's debt levels are low and debt amortizes quickly. All state debt is either GO or
guaranteed, except for turnpike revenue bonds. Net tax-supported debt, including a $150 million
issuance expected later this summer, represents a low 1.7% of 2009 personal income, reflecting
somewhat the historically limited role of state government. The current offering is a refunding
structured to provide budgetary relief in the current biennium.

Funding of the state's pension system has declined significantly over the past decade. As of June 30,
2009 the state's pension system funded ratio was 58.3%, down from 89.9% in 2000. Improving its
actuarial position will present a future spending pressure.

New Hampshire is a prosperous state that has shifted rapidly from manufacturing to services, as its
economy has become more like the nation's. The state's population and job growth have generally
outpaced New England's since 1980, benefiting from the expansion of Boston suburbs into New
Hampshire and growth in the trade, transportation and utilities and other services sectors. The state
did not lose jobs year-over-year in the current downturn until December 2008 and employment
losses remained below the national rate through the recession, with non-farm employment down
3.4% in 2009 versus 4.3% nationwide. Job growth has resumed at a modest rate, up .3% in May
2010 while the U.S. continues to show some losses at .4%. Although unemployment levels have
increased significantly, the unemployment rate remains well below the national average at 6.4% in
May 2010 versus 9.7% for the U.S. Per capita personal income is 108% of the nation's, ranking
New Hampshire ninth among the states.

New Hampshire's tax structure, specifically its lack of a personal income or general sales tax,
differentiates it from all other states except Alaska and is a key influence on its economy and
financial operations. The state relies on business, real estate, and excise taxes, as well as a statewide
property tax dedicated solely to education. This unique tax structure is volatile, especially the taxes
on business profits, which are vulnerable to swings in the business cycle, and on real estate
transfers, which are sensitive to housing market conditions.

The enacted budget for the fiscal 2010-2011 biennium assumed minimal growth in base revenues,
and used a combination of revenue enhancements, expenditure reductions, reserves and one-shots to
achieve balance. Expense reductions included lay-offs, health benefit restructuring, and the closing
of state facilities, including a prison and courts. The budget increased education spending by $120
million to address State Supreme Court decisions regarding primary and secondary education
funding. In 1997 the court placed the responsibility for adequate education on the state. The state
responded with the statewide property tax, increases in various taxes, including cigarette and real
estate, and a new car rental tax, among other revenue enhancements.

Revenue enhancements in the fiscal 2010-2011 enacted plan included a 45 cent increase in the
tobacco tax, a 1% increase in the meals and room tax and its expansion to campsites (an expansion
since repealed), a 10% tax on gambling winnings, and the expansion of the interest and dividends
tax (an expansion also since repealed). Revenue sharing with local governments was reduced,
saving the state $25 million per year. The budget assumed $22.5 million transfer in each year from
the surplus in the medical malpractice fund, which will not take place due to a successful legal
challenge. The operating expenses of the liquor commission were moved from the general fund to a
separate enterprise fund and some assets of the liquor commission are to be sold.

Despite all of these adjustments, a $295 million budget gap has been identified in the fiscal
2010-2011 biennial budget and some uncertainty remains on both the spending and revenue side of
the budget. The shortfall is due largely to revenues falling short of expectations, but also reflects the
$45 million that cannot be transferred from the medical malpractice fund, as well as increased
caseloads associated with the economic downturn. Revenues, which had begun to show signs of
stabilizing at the end of the first half of the fiscal year in December, performed under expectation
for fiscal 2010 as a whole and are projected to fall $164 million short for the biennium. Estimated
revenues for fiscal 2010 were essentially flat to fiscal 2009, but down an estimated $84.8 million, or
3.8%, below plan. Business taxes are down 4.3% year-over-year and are 6.1% below plan. Meals
and rooms tax revenue is up 9.2% year-over-year, reflecting the increase in the rate, but is 8.5%
below plan. Tobacco taxes, which also were increased in the budget, are up 24% and are 10.4%
above plan.

In response, the legislature enacted a deficit reduction plan that includes $82 million in spending
reductions, additional lapses and fund transfers, debt restructuring, a $25 payment from the
university system and other smaller revenue and spending items. The university system will also
receive $25 million in additional bonding capacity. Some uncertainty remains in the budget as the
gap closing measures also include an assumption that the enhanced federal match for Medicaid
(FMAP) will be extended as well as $60 million in as yet unidentified asset sales.

Applicable criteria available on Fitch's website at www.fitchratings.com:

--'Tax-Supported Rating Criteria', dated Dec. 21, 2009;
--'U.S. State Government Tax-Supported Rating Criteria', dated Dec. 28, 2009.

Contact: Karen Krop +1-212-908-0661 or Laura Porter +1-212-908-0575, New York.

Media Relations: Cindy Stoller, New York, Tel: +1 212 908 0526, Email:
cindy.stoller@fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

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