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HOUSTON (TEXAS) TAX DEBT RATED 'AA/F-1+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Jan. 29 /PRNewswire/ -- Houston (Texas)' $41 million Variable Rate Demand Certificates of Obligation Series 1993A, $69 million Variable Rate Demand Certificates of Obligation Series 1993B, and $1.2 million Variable Rate Demand General Obligation Bonds Series 1993C are rated 'AA/F-1+' by Fitch. The issues will be sold through negotiation by a syndicate led by J.P. Morgan Securities Inc. on or about Feb. 2. The credit trend is stable.
 The later stages of the national recession have had a mild impact on Houston. Employment growth slowed in 1991 and was about flat last year. The unemployment rate rose to 6.7 percent (preliminary) in October 1992. Other economic indicators, such as office vacancy and average rent, and residential building permits show some improvement. Sales tax revenue growth has been slow, indicative of recession related pressures.
 The economic downturn has worsened the city's revenue/expenditure imbalance that existed since Houston began drawing down a once-large fund balance in fiscal 1990. Audited results for fiscal 1992 reveal a small operating deficit, reducing the year-end unreserved fund balance to 2.9 percent of expenditures, below the city's 5 percent ordinance. Measures taken to balance the fiscal 1993 budget include a debt restructuring that reduced extremely rapid amortization to an average rate and higher traffic fines resulting from stricter enforcement. To date, revenue performance is weaker than expected, with general fund resources projected to be 1 percent-3 percent below budget. While expenditures are projected to be under budget as well, a small operating deficit now is expected. The ending unreserved fund balance is projected to decline to $18-$21 million from $23 million, 2.4 percent-2.7 percent of expenditures, excluding debt service. Also, the city is attempting to reduce a projected $11 million year-end deficit in its health benefits fund.
 Strong liquidity for certificate holder and bond holder puts is provided under standby bond purchase agreements with Morgan Guaranty Trust Co. for the 1993A certificates, and with Canadian Imperial Bank of Commerce (New York Agency) for the 1993B certificates and 1993C bonds. Both banks have 'F-1+' short term ratings from Fitch. Houston's overall debt burden remains moderate.
 -0- 1/29/93
 /CONTACT: Amy S. Doppelt, 212-908-0514, Richard J. Raphael, 212-908-0506, or Stewart Simon, 212-908-0508, all of Fitch/


CO: City of Houston ST: Texas IN: SU: RTG

SH -- NY008 -- 0612 01/29/93 08:52 EST
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Publication:PR Newswire
Date:Jan 29, 1993
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