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MICHIGAN $900 MILLION GENERAL OBLIGATION NOTES RATED 'F-1+' BY FITCH -- FITCH FINANCIAL WIRE --

    NEW YORK, Feb. 22 /PRNewswire/ -- Michigan's $900 million full faith and credit, general obligation notes, expected on Feb. 23 through negotiation with a syndicate headed by Bear, Stearns & Co., Inc., are rated "F-1+" by Fitch.  The notes will be due Sept. 30, 1993, are not callable, and are payable from undedicated revenues and, if necessary, from amounts to be loaned to the state pursuant to a standby note purchase agreement.
    The notes will provide operating cash for the state during the remainder of the current fiscal year, which ends on Sept. 30.  The recession has caused the state in recent years to use most of its budget stabilization fund and to take other measures to retain balanced operations.  This trend has continued this year and last month, revenues were revised downward.  Proposals to re-achieve balance have been presented and are currently under negotiation in the legislature.  In the absence of corrective legislation, the general and school aid funds are expected to have deficits which would strain resources and limit note security.  While it is expected that budgetary solutions will be achieved, that they are not now in place creates some uncertainty.
    To enhance note security, the state has entered into a standby note purchase agreement with a consortium of five banks.  If the state has insufficient funds to repay the notes in full at due date, the banks will lend to the state the full amount required.  The conditions to lend are related to documentation and are not onerous.  The additional security and liquidity represented by the agreement place the notes in the highest rating category.
    -0-             02/22/93
    CONTACT:  Claire Cohen of Fitch, 212-908-0552 ST:  MI


-- NY073 -- X404 02/22/93
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Publication:PR Newswire
Date:Feb 22, 1993
Words:283
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