NEW JERSEY $450 MILLION GENERAL OBLIGATION BONDS 'AAA', NOTES 'F-1+/F-1+' BY FITCH -- FITCH FINANCIAL WIRE --
NEW JERSEY $450 MILLION GENERAL OBLIGATION BONDS 'AAA', NOTES
'F-1+/F-1+' BY FITCH -- FITCH FINANCIAL WIRE --
NEW YORK, Dec. 9 /PRNewswire/ -- The State of New Jersey's $450.9 million General Obligation Bonds, to be offered for bids on Dec. 10, are rated "AAA" by Fitch. The 'AAA' rating assigned to $3.1 billion outstanding general obligations is affirmed, completing Fitch's review. The credit trend is stable. This is the first time that New Jersey has requested a rating from Fitch. The new issue includes $413.4 million tax-exempt and 501 (c)(3) bonds, $12.5 million tax-exempt facility bonds and $25 million which are taxable for federal income tax purposes. The bonds will be due Aug. 1, 1993-2012 and callable beginning Aug. 1, 2002, at 101.5 percent.
In a separate action, $200 million Series 1991D and 1991E Tax and Revenue Anticipation Notes of the state are rated "F-1+/F-1+." The notes, which will be used for cash management, are expected by negotiation with Lehman Brothers and Citicorp Securities Markets, Inc. during this week. They are not general obligations of the state but are payable from monies in the general and property tax relief funds attributable to the 1991-92 fiscal year. Together with $1.6 billion outstanding notes, they will mature on June 15. The notes will be variable rate, initially in a daily mode, and liquidity will be furnished by a standby bond purchase agreement with Credit Suisse, Swiss Bank Corp., and Union Bank of Switzerland.
New Jersey's credit fundamentals - broad, wealthy, and diverse economy, excellent debt position with low to moderate ratios and a history of balanced financial operations - are among the strongest. Development during the 1980's was extensive, building on an already considerable base, and while the state's economy is now in recession affecting financial operations as well, the underlying resources provide a solid credit base. The notes are well protected, with the total being used for operations equal to only about 8 percent of estimated cash receipts. The projected balance available at June 30, 1992, is sizable at about 4 percent of cash flow.
Despite its fundamental strength, New Jersey may have to deal with some potentially difficult financial decisions. There are proposals to sunset, as of June 30, 1992, the large tax increases in 1990 of more than $2 billion. Clearly, a rational solution to the tax dispute which is within New Jersey's balanced budget requirement is necessary to retain high grade credit standing.
/CONTACT: Claire G. Cohen of Fitch, 212-908-0552/ CO: ST: New Jersey IN: SU: RTG SH -- NY058 -- 0633 12/09/91 14:37 EST