New York, December 06, 2012 -- Moody's Investors Service has affirmed the Aa2 Issuer rating of Long Beach, CA and has downgraded to A2 from A1 the ratings of five series of lease supported obligations, including Series 2006 (Rainbow Harbor), Series 2006 (Parks and Open Space), Series 2005 (Temple Willow), Series 1998 (Temple and Willow) and Series 2003 (Solid Waste Facility Lease Revenue Bonds). Approximately $158 million of debt is affected by this rating action.

RATINGS RATIONALE

The size and diversity of the city's tax base and the city's key location in the heart of Los Angeles area economy are the credit strengths underlying these ratings. The city's population appears to have benefited from the size and diversity of the region's economy by making significant gains in income levels relative to other cities in the state and the nation according to the 2010 census results . Despite these gains, the city's unemployment rate remains chronically high, which weighs on the ratings. Also key to the ratings are the low direct debt level and manageable lease burden. The city's financial operations are stable with moderately growing reserves and liquidity, but size of the reserves is significantly below the medians for similarly rated cities in the state and nationally, which is the key weakness factored in the ratings. The Outlook on the ratings is stable.

The three notch rating distinction between the city's A2 lease rating and its Aa2 issuer rating represents the less secure pledge for lease payments and reflects the additional risk to bondholders from the city's financial, operational and economic condition over the more secure GO pledge. Under California law, a city's GO pledge is an unlimited ad valorem pledge of the city's tax base. The city must raise property taxes by whatever amount necessary to repay the obligation, irrespective of its underlying financial position. A lease pledge is a contractual obligation, on parity with a city's other unsecured obligations, backed by the all of the city's available financial resources. The notching between the issuer rating and lease rating could widen if the city's general fund financial position deteriorates and thus further limits the already narrow lease pledge.

Key Credit Strengths

o Large and diverse tax base

o Resumption of growth of the tax base

o Stable financial operations

o Moderate debt levels Key Credit Challenges o Low reserve levels o Chronically high unemployment levels

WHAT COULD MOVE THE RATING UP

- Strengthening of local economy, evidenced in improved employment profile and sustained tax base expansion

-Stronger reserve position

WHAT COULD MOVE THE RATING DOWN

- Weakening of local economy, reflected in deteriorated employment base and resumed tax base contraction

Outlook

The outlook on the ratings is stable. We expect the city to continue its stable General Fund operations and continue moderate growth in reserves. Significant deterioration of the reserve position would weigh on the ratings.

The principal methodology used in this rating was General Obligation Bonds Issued by U.S. Local Governments published in October 2009. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

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Kevork Khrimian Vice President - Senior Analyst Public Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Gregory W. Lipitz Vice President - Senior Analyst Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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