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MASS WTR POLL ABATE TRUST'S $93 MIL. BONDS RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 3 /PRNewswire/ -- The Massachusetts Water Pollution Abatement Trust's $93 million Water Pollution Abatement Revenue Bonds, (Pooled Loan Program) Series 1 are rated 'AA' by Fitch. The credit trend is stable. The issue is scheduled to be sold by negotiation next week, by a syndicate led by Merrill, Lynch & Co.
 The series 1 revenue bonds are the Massachusetts Water Pollution Abatement Trust's second bond issuance for its revolving fund program. The first issue funded approximately $148 million in program loans to the Massachusetts Water Resources Authority under the federal revolving loan fund program. Proceeds of this issue will finance pollution abatement projects for 19 municipal borrowers; 12 will borrow a total of $51.5 million in loans under the federal revolving loan fund program and seven will borrow $41.4 million in loans under the commonwealth revolving loan fund program. While the initial repayment obligation lies with these borrowers through either their general obligation or sewer revenue pledge, or both, the trust's financing structure provides substantial reserves under both the bond resolution and program resolution, which add considerably to bond security.
 The general reserve links successive federal loan program bond issues at the bond indenture level and the deficiency fund secondarily makes these moneys available at the program indenture level. Therefore, the rating is programmatic in nature, and the quality of the borrowers in any one pool is not a credit factor. The overall credit profile of the underlying borrowers through 1995 is expected to be about average quality and, therefore, the reserves enhance their repayments to the higher level.
 This issue contains loans under both the federal and the commonwealth revolving loan fund programs, and hence contain segregated general reserves and deficiency funds for the respective programs. However, this is the only issue expected to contain commonwealth program loans. In addition, cash flow analysis of these commonwealth loans reveals that 100 percent of these loans could default for the life of the issue and no bond default would result. This is possible because 90 percent of these loan repayments are subsidized by commonwealth assistance contract payments. Cash flow analysis of the federal program loans in this issue reveals that approximately one-half of these loans could default for the life of the bond issue demonstrating the extent of the credit enhancement lent by the trust's financing structure.
 -0- 6/3/93
 /CONTACT: Andrea R. Bozzo of Fitch, 212-980-0515/


CO: Massachusetts Water Pollution Abatement Trust ST: Massachusetts IN: SU: RTG

TM -- NY100 -- 4104 06/03/93 16:39 EDT
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Publication:PR Newswire
Date:Jun 3, 1993
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