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CONNECTICUT $450 MILLION UNEMPLOYMENT COMPENSATION BONDS RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, July 14 /PRNewswire/ -- The State of Connecticut's $450 million Special Assessment Unemployment Compensation Advance Fund Revenue Bonds, 1993 Series A are rated "A+" by Fitch. The bonds will be sold through negotiation by a syndicate led by Goldman, Sachs & Co. on or about July 20. The bonds mature semiannually May 15 and Nov. 15 from Nov. 15, 1994 to Nov. 15, 2000, and are noncallable.
 The bonds' credit strength lies in the predictability of the special assessment security, in that it is levied based on historical employment and includes a sound coverage factor. Connecticut's unemployment compensation program benefits from this cost saving issuance, and the significant changes made to restore the program's fiscal balance. However, these changes will result in increased costs to employers in the state.
 This issue is the first of three to retire the state's outstanding loan from the federal unemployment compensation trust fund. The loan results from state unemployment compensation benefits exceeding contributions from employers, beginning in 1991. The outstanding loan totals $692 million, with interest charged at taxable rates. By refinancing the loan with tax-exempt bonds, the state expects to save 2.5 - 3.0 percent, or about $100 million. The additional financings consist of $213 million in variable rate bonds with a swap into fixed rate, and $322 million in variable rate bonds. These issues will be secured on par with the series A bonds, and will be sold within the next two months.
 The bonds are secured by an annual dollar amount special assessment charged against employers based on their taxable wages in the preceding year. The assessment translates into a percentage of the employers' regular tax rate charged for its contribution to the state unemployment compensation fund. The assessment rate is unlimited, and will be levied to be sufficient to cover debt service 1.2 times and all other expenses. Additional revenue generated by the 20 percent coverage factor will be used to call variable rate bonds. The assessment procedure includes a mechanism for an additional assessment midyear if revenue produced falls short of debt service. Bond principal is further secured by the state's requirement to draw from the unemployment compensation fund, if necessary, to make the principal repayments. Federal law prohibits the fund's resources from being used to pay interest.
 Changes made to state's unemployment compensation program raise the amount of taxable wages and increase the maximum tax that can be levied to keep the fund solvent. Based on reasonable assumptions, the higher taxes should produce revenue sufficient to meet benefit needs on a cumulative basis for the next 10 years. While these changes correct severe financial imbalance, the combined tax and assessment burden to employers represents a significant increase.
 -0- 7/14/93
 /CONTACT: Amy S. Doppelt, 212-908-0514, or Claire G. Cohen, 212-908-0552, both of Fitch/


CO: ST: Connecticut IN: SU: RTG

MG -- NY076 -- 1535 07/14/93 15:05 EDT
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Date:Jul 14, 1993
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