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NEW YORK LOCAL GOVERNMENT ASSISTANCE CORP. $329.75 MILLION BONDS RATED 'A+' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Dec. 3 /PRNewswire/ -- New York Local Government Assistance Corp.'s (LGAC) planned issue of approximately $329.75 million series 1993 D Bonds is rated 'A+' by Fitch. The bonds, scheduled to be sold Dec. 8, are entirely for refunding purposes. The issue will mature on April 1, including serials due 1995-2009 and term bonds in 2014 and 2023; call features are yet to be determined. Bear, Stearns & Co., Inc. is lead underwriter. The credit trend is stable; the same evaluation as for the State of New York.
 LGAC was created as a means of financing $4.7 billion of the state's accrued general fund deficit. Proceeds are used to make local aid payments, which normally are met from proceeds of the state's annual "spring borrowing". As LGAC incurs debt, an equal amount must be reduced from the spring borrowing. There is an overall limit, by covenant, of $4.7 billion for the two combined, unless an emergency is declared.
 LGAC bonds are general obligations of the corporation, payable from the deposit of the yield of 1% of the state's 4% sales and use tax. Moneys in excess of LGAC's needs flow to the general fund. While payments from the sales and use tax require state appropriation, this risk is hedged. Unless an appropriation is in place, the 1% yield is retained in a special fund available to neither LGAC nor the state. The 1% tax yielded around $1.49 billion in fiscal 1993, which would cover debt service on the total authorization of bonds by 3.43 times (x) at an 8% interest rate and 3.31x at a 9% interest rate. Estimated yield in fiscal 1994 would increase coverage to 3.50x at 8% and 3.38x at 9%.
 Security strengths include the broad base of the designated tax, the generous level of coverage and the structured protections against non- appropriation, and concurrent excessive operating borrowing. LGAC is, however, an instrument of the State of New York, an integral part of this ongoing fiscal reform. Operations in 1992-93 were favorable enough to allow cash payment of $531 million notes for a past deficit and leave a considerable balance. Operating borrowing for 1993-94 was sharply lower, reflecting the improved financial situation. The budget for 1993- 94 is in balance and operations for the first half of the year are slightly ahead of the plan. While certain legislation concerning pension funding has been found unconstitutional, the comptroller is developing a plan to provide for the state's liability in a manner that will not adversely affect financial condition.
 -0- 12/3/93
 /CONTACT: Claire G. Cohen of Fitch, 212-908-0552/


CO: New York Local Government Assistance Corp. ST: New York IN: SU: RTG

WB -- NY080 -- 0442 12/03/93 18:09 EST
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Publication:PR Newswire
Date:Dec 3, 1993
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