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County of Essex AA-'Ratings Afrmed On Stable Financial Performance; Outlook Stable <br />Despite having a strong financial profile on a stand -alone basis, the financial risk profile of lower -tier <br />member municipalities influences the county's credit profile. Debt issuance at the lower -tier level has <br />indirect influence on the county's overall debt - carrying capacity. <br />Essex's economy is relatively less diversified than that of most domestic peers. The county's economy <br />is heavily concentrated in manufacturing, particularly in the cyclical automotive sector, with remaining <br />employment largely being rural. As a result of the recent downturn, especially in Ontario's <br />manufacturing sector, the county's indicators point to below- average economic performance: the <br />unemployment rate in the Essex - Windsor area was 9.3% in 2007, a marginal rise from 2006. In <br />addition, building permits and housing starts decreased about 48% and 24 %, respectively, in 2007, <br />while income- support caseloads increased by about 19 %. Nevertheless, we expect moderate <br />diversification strategies to modestly benefit the county's economy. For example, Essex is refocusing its <br />manufacturing away from the automotive sector, toward sectors such as alternative energy, medical <br />equipment, aerospace and pure and applied research and development. <br />The stable outlook reflects the expectation that there will be no material increase in the county's debt <br />and that cash and investment balances will remain strong. Standard & Poor's also expects that Essex <br />will continue to produce stable operating results. A dramatic increase in debt at the lower -tier level or a <br />major economic deterioration could lead to a negative ratings action. <br />rr lr <br />HK <br />�ull,� I r l I� , l <br />Ratings Affirmed <br />Essex (County oo <br />Issuer credit rating AA- /Stable / <br />Senior unsecured debt (1 issue) AA- <br />Standard & Poor's I COMMENTARY 2 <br />