2008 Credit Rating-Standard & Poors Ratings

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C ount y o f r ' Stable'Financial Performance; Outlook Rationale Primary Credit Analyst. - Prim i Patel, CFA Standard & Poor's Ratings Services has affirmed its `AA -' long -term issuer and senior Toronto unsecured debt ratings on the County of Essex, in the Province of Ontario (AA/Stable /A -1 +) . (1) 416- 507 -2558 bhavini_patelg The outlook is stable. standardandpoors.com The ratings on Essex reflect low and declining debt on a stand -alone basis, healthy liquidity, Secondary Credit Analyst: and stable budgetary performance. In Standard & Poor's opinion, offsetting these strengths Stephen Ogilvie Toronto are a credit profile that is affected by the debt issuance of the lower -tier member municipalities (1) 416- 507 -2524 and a relatively less diverse economy compared with those of domestic peers. stephen_og i Ivie@ standardandpoors.com County debt levels on a stand -alone basis are relatively low compared with those of similarly rated peers, both domestically and internationally. At fiscal year -end Dec. 31, 2007 direct debt represented 34% of operating revenue. With no further forecast debt issuance in the next three years, we expect Essex's debt levels to gradually decline to less than 25% of operating revenue by 2011, lower than the median of similarly rated Canadian peers. Further strengthening Essex's credit profile is its healthy liquidity. The county's strong li in our opinion, has resulted in it maintaining its net creditor status for many years. Cash and liquid investments represented about 66.4% of operating expenses at Dec. 31, 2007. We expect liquidity to improve moderately and that Essex will maintain above - average levels. Essex's budgetary performance has a lengthy record of strong financial performance. In fiscal 2007, the county generated about a 15% surplus of operating revenue, consistent with all but one of the last six years. Conversely, the county's balance after capital expenditures as a percentage of total revenues declined notably to about 1.6 %, compared with 9.1 % in fiscal 2006. The decline was the result of a marked increase in capital expenditures related to Publication Date roadways and recycling. Nevertheless, the ability to generate sizable operating surpluses is a Dec. 1, 2008 key credit strength, in our opinion, because it provides the county with the financial flexibility to maximize pay -as- you -go financing and limit debt issuance.