Fitch Ratings assigns an 'AA+' rating to the following State of Wisconsin (the state) transportation revenue bonds:

--$374.73 million transportation revenue bonds, 2012 series 1.

The bonds are expected to sell via negotiated sale as early as the week of March 19. In addition, Fitch affirms the following ratings:

--$1.768 billion in outstanding state transportation revenue bonds at 'AA+'.

The Rating Outlook is Stable.

SECURITY

The bonds are revenue obligations of the state secured by a first lien pledge on vehicle registration and certain related fees levied by the state.

KEY RATING DRIVERS

--STABLE REVENUE SOURCE: The principal revenue source, vehicle registration fees, is narrow though stable, and the state has periodically raised revenues to augment coverage.

--SATISFACTORY COVERAGE: The additional bonds test requires that pledged revenues cover debt service by 2.25 times (x), a satisfactory level. Coverage of maximum annual debt service (MADS) is ample.

--MODEST FORECAST GROWTH: Forecast annual growth in pledged revenues is modest and well under historical averages, although future transportation borrowing could narrow coverage.

WHAT COULD TRIGGER A RATING ACTION

--Changes to the state's practice of limiting leverage of the revenue stream.

CREDIT SUMMARY

The 'AA+' rating reflects ample coverage and security from a first claim on statutorily pledged program income (derived largely from motor vehicle registration fees) along with the satisfactory additional bonds test of 2.25 times (x) and long track record of raising and expanding revenues as necessary. Pledged revenues are essentially a narrow single source, not constitutionally dedicated, and the larger transportation fund revenues are not pledged. The current sale consists of new money and refunding proceeds, with the new money proceeds used to fund state transportation facilities and highway projects.

The bonds are secured by a first claim on pledged program income, primarily vehicle registration fees equal to 86% of total program income as of fiscal 2011, and other registration-related fees pledged since 2003, including titling and personalized license plate charges. To provide additional revenues, fees have been periodically increased with the last increase effective Jan. 1, 2008.

The additional bonds test requires 2.25x coverage by historical revenues, with the state by policy targeting a minimum of 2.5x coverage. Total pledged revenues in fiscal year 2011 equaled $591.4 million, which provided 2.74x coverage of MADS including the new bonds, and including $130 million authorized bonds to refund outstanding transportation revenue commercial paper (CP) notes, whose pledge is subordinate to the bonds. Estimated fiscal 2012 registration fees alone provide satisfactory coverage of MADS equal to 2.42x in fiscal 2012, with all pledged revenues providing 2.85x coverage. During the forecast period from fiscal 2012 to 2021, annual coverage by all pledged revenues ranges from 2.82x in fiscal 2013, the year of MADS, to 3.76x in fiscal 2020.

Vehicle registration fees historically have been a stable source of revenues, although they are affected by economic conditions. The state has a history of raising fees to support the program and augment coverage; effective Jan. 1 2008, it increased the automobile registration fee $20, to $75, and the title transaction fee $24.50, to $69.50. Registration fee revenues consequently rose 18.8% and 11.7% in fiscal 2008 and 2009, respectively, even as recessionary conditions slowed the growth of registrations to 1% and 1.2% during those years. Growth in registration fee revenues has been uneven since then, reflecting in part the slow nature of the economic recovery. Registration revenues rose 1.7% in fiscal 2010 and declined 1.9% in fiscal 2011; the state currently forecasts that registration revenues will rise 2.2% in fiscal 2012. Average annual growth in registration revenues through the fiscal 2021 forecast period is just under 0.5% annually.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Tax-Supported Rating Criteria' (Aug. 15, 2011).

--'U.S. State Government Tax-Supported Rating Criteria' (Aug. 15, 2011).

Applicable Criteria and Related Research:

Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648898

U.S. State Government Tax-Supported Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=648897

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