Printer Friendly

NEGATIVE IMPLICATIONS OF CALIFORNIA BUDGET STALEMATE RISE, FITCH SAYS -- FITCH FINANCIAL WIRE --

NEGATIVE IMPLICATIONS OF CALIFORNIA BUDGET STALEMATE RISE, FITCH SAYS
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Aug. 28 /PRNewswire/ -- Because of the state's continuing budget stalemate, appropriations are not present for a Sept. 1 debt service payment on a number of bond issues supported by lease rental payments of the State of California. The state's general obligation and lease secured debt remains on FitchAlert with negative implications and will be reviewed fully following budget adoption.
 The affected lease bonds include the following issues of the State Public Works Board: Lease Revenue Bonds (Department of Corrections) 1986 Series A (State Prison-Corcoran), 1990 Series A (State Prison-Madera County), and 1991 Series A (State Prisons-Imperial County), Lease Revenue Bonds (The Trustees of the California State University) 1990 Series A (California State University Library Projects). In addition, the Los Angeles State Building Authority Lease Revenue Bonds 1988 Series A are in the same situation. All of these issues will require use of reserve funds if appropriations are not made by Sept. 1.
 Additionally, other debt service payments are due on lease backed bonds Sept. 1, and will be provided from current own-source revenues, prior year's appropriations, and capitalized interest. These issues are the following State Public Works Board bonds: Energy Efficiency Revenue Bonds, Series 1986A and 1991A, Lease Revenue Bonds (California Community Colleges) 1991 Series A, and Lease Revenue Bonds (The Regents of the University of California) 1988 Series A (Berkeley Campus Life Sciences Facilities) and 1990 Series A (Various Projects). All but the Energy Efficiency Series 1991A bonds have debt service reserve funds as well, although the state does not expect to draw upon these reserves.
 Additionally, two Public Works Board issues, 1987 Series A (State Prison-Del Norte) and Lease Revenue Bonds 1991 Series A (Franchise Tax Board Central Office Project-Phase II), and the East Bay State Building Authority Certificate of Participation Series 1991A and 1991B are due Sept. 1, and will be paid from capitalized interest or surplus construction funds.
 To avoid use of reserve funds for some of the issues, an interpretation is being sought of a section of the government code that would permit treatment of lease rental payments on debt issued by the State Public Works Board as continuing appropriations, allowing payment of debt service in the absence of an adopted budget. For the Los Angeles State Building Authority's payment, the Treasurer's office is seeking use of other available funds, and, if unsuccessful, would use the debt service reserve. In addition, special legislation is being pursued that would provide for a continuing appropriation for all lease- backed debt payments due on Sept. 1 and in the future.
 Use of the reserve funds, while an indication that debt service does not hold a sacrosanct position, is not of itself that negative, if replenished, since a major purpose of the reserve is to protect against late budget adoption. However, the unwillingness of the state to insulate its obligations to bondholders from its internal budget dispute is extremely negative to overall credit.
 -0- 8/28/92
 /CONTACT: Amy Doppelt, 212-908-0514, or Claire Cohen, 212-908-0552, both of Fitch/ CO: State of California ST: California IN: SU: RTG


LR -- NY022 -- 4308 08/28/92 10:46 EDT
COPYRIGHT 1992 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Aug 28, 1992
Words:531
Previous Article:PANCANADIAN AND RANKIN FORM KINETIC RESOURCES (LPG) TO MARKET LPGs
Next Article:FANNIE MAE ISSUES DEBENTURE ANNOUNCEMENT


Related Articles
CALIFORNIA INDEMNITY 'BBB+' CLAIMS PAYING RATING ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
CALIFORNIA GENERAL OBLIGATION, SOME AGENCY RATINGS ON FITCH ALERT NEGATIVE -- FITCH FINANCIAL WIRE --
VENTURA CO. (CALIF.) AREA HOUSING AUTHORITY 'CCC' BONDS ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
NEGATIVE IMPLICATIONS OF CALIFORNIA BUDGET STALEMATE RISE, FITCH SAYS -- FITCH FINANCIAL WIRE --
WELLS FARGO 'A' SENIOR DEBT, OTHER RATINGS ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
PMI-INSURED 'AAA' MORTGAGE ISSUES PLACED ON FITCHALERT NEGATIVE -- FITCH FINANCIAL WIRE --
CALIFORNIA FEDERAL BANK MORTGAGE PASS-THROUGH SERIES 1992 MW-2 CLASS A RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters