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MICHIGAN STATE BUILDING AUTHORITY REVENUE BONDS RATED 'AA-' BY FITCH -- FITCH FINANCIAL WIRE --

MICHIGAN STATE BUILDING AUTHORITY REVENUE BONDS RATED 'AA-' BY FITCH
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Dec. 6 /PRNewswire/ -- Michigan State Building Authority's $499.4 million 1991 revenue bonds, series I and II are rated 'AA-' by Fitch. The bonds are expected to be priced on or about Dec. 10. The two series will be secured by a single pool of leases payable by the state of Michigan. The rating reflects the state's general creditworthiness, strong legal provisions in the underlying lease obligations of the state, and overall state support of the authority.
 Lease provisions are excellent, with rental payments appropriated directly by the state legislature constituting on going contractual obligations. This refunding will achieve multi-year budget savings. The key role that the building authority assumes in state's capital financing is also a positive factor.
 The state's general obligation bonds are rated 'AA' and overall state tax-supported debt levels remain low. Following a problematic year characterized by use of nonrecurring resources and expenditure cuts, the 1991-92 budget is balanced using one-shot resources only minimally. However, revenue projections may be optimistic and are vulnerable to the timing and strength of the national economic recovery.
 The primary strength of the leases is a provision which contractually obligates the state to make rental payments for the entire term of the bonds. A debt service reserve fund, equal to 25 percent of maximum annual debt service, is provided from proceeds.
 Another major strength is the central role of the building authority in the state's capital program, accounting for about 65 percent of state debt. Nearly $1.3 billion of such debt will remain outstanding after this issue. Most of the debt is for state prisons and higher education facilities.
 -0- 12/6/91
 /CONTACT: Richard Raphael, 212-908-0506, or Claire Cohen, 212-908-0552, both of Fitch/ CO: Michigan State Building Authority ST: Michigan IN: SU: RTG SM -- NY070 -- 0275 12/06/91 17:31 EST
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Publication:PR Newswire
Date:Dec 6, 1991
Words:318
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