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MOODY'S ASSIGNS

            MOODY'S ASSIGNS  Aa' RATING TO INITIAL BORROWING
             OF WASTEWATER MANAGEMENT AUTHORITY OF ARIZONA
    NEW YORK, Nov. 15 /PRNewswire/ -- Moody's Investors Service today assigned a "Aa" rating to the initial borrowing of the Wastewater Management Authority of Arizona.
    The authority expects to issue a total of $30,360,000 of bonds comprised of $26,835,000 wastewater treatment financial assistance revenue bonds, Series 1991 and $3,525,000 wastewater revolving fund capitalization revenue bonds, Series 1991.  The issuance is expected through negotiation the week of Dec. 2, 1991.
    The issuance represents the initial financing by the state of Arizona under the Water Pollution Control Revolving Fund Program authorized under Title VI of the federal Clean Water Act.  Proceeds of the borrowing will be loaned to the city of Phoenix which will evidence its loan repayment obligation with a general obligation pledge, currently rated Moody's "Aa."  The city expects to use the proceeds to finance a portion of the project costs associated with expansion of the 23rd Avenue Wastewater Treatment Plant.  Phoenix will borrow the funds from the authority at a subsidized interest rate, expected to approximate 60 percent of the authority's market rate.  The subsidized debt service will be paid from interest earnings on various accounts established under the bond resolution including a reserve, the Capital Grant Account, pledged to the financial assistance revenue bonds.  This reserve will initially be funded from federal funds granted to the state under Title VI and will equal approximately 59 percent of bonds outstanding.  As Phoenix repays its loan and authority bonds are amortized, the reserve will decline proportionately, with freed up funds available to secure future loans by the authority.  Investment earnings on the various funds to be invested in guaranteed investment contracts are key to the timely payment of principal and interest.
    Moody's noted, "High grade security is primarily derived from the repayment obligation of the city of Phoenix evidenced by a general obligation pledge.  Basic security on the capitalization revenue bonds is supported by a standard debt service reserve fund.  Financial assistance revenue bonds are further secured by the Capital Grant Account funded from federal monies.  Interest earnings on bond resolution funds invested in guaranteed investment contracts will provide an interest rate subsidy to the city, thereby reducing effective cost to about 60 percent of the authority's borrowing rate.  The ratings of both the city of Phoenix general obligation repayment pledge and guaranteed investment contract providers are linked and remain essential to maintaining the ratings on the authority's bonds."
    -0-              11/15/91
    /CONTACT:  Robert Stanley, 212-553-0334, Steve Levine, 212-553-4097, or Chris Mushell, 212-553-7939, all of Moody's/ CO:  Waste Water Management Authority of Arizona ST:  Arizona IN: SU:  RTG PS-CK -- NY103 -- 1806 11/15/91 18:34 EST
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Publication:PR Newswire
Date:Nov 15, 1991
Words:456
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