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RHODE ISLAND 'AA-' GO BOND RATING AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, July 2 /PRNewswire/ -- The 'AA-' rating assigned to $650 million general obligation bonds of the State of Rhode Island and Providence Plantations is affirmed by Fitch, in conjunction with the sale of $70.7 million refunding bonds. The new bonds, due June 15, 1994-2009, will be insured by the AMBAC Indemnity Corp.
 Rhode Island has a long record of financial responsibility, with demonstrated willingness and ability to respond to changing conditions, often as a result of vulnerability to business cycles. This recession has been harsh in the state, with abrupt cessation of rapid growth, hampered further by a crisis involving several credit unions. Yet, the state retained financial balance and through the institution of spending controls, has been able to begin rebuilding its budget reserve. A balanced budget is anticipated for 1993-94 and plans call for the reserve to reach its maximum size. In addition, funds are expected to be on hand for capital purposes. Employment losses, about 9 percent from the 1989 peak, appear to have stabilized and slow growth is anticipated in the future. Services are now the major employer and this sector has been showing expansion recently while manufacturing continues to lag. Cuts in defense spending will contribute uncertainty to manufacturing particularly since nuclear submarines are built in the state. The economic outlook indicates that the state will continue to face some financial pressure but attention to structural reform and the requirement, now constitutional, that expenditures not exceed 98 percent of revenues are a strong offset.
 Rhode Island has built up a high level of debt, which amounts to nearly 9 percent of personal income, in part because of borrowing involving the credit union workout and secured from a dedication of a portion of the sales tax. A lower level of general obligation borrowing is anticipated in immediate years and pay-as-you-go capital financing is expected to increase.
 -0- 7/2/93
 /CONTACT: Claire G. Cohen of Fitch, 212-908-0552/


CO: ST: Rhode Island IN: SU: RTG

TM -- NY043 -- 8271 07/02/93 16:16 EDT
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Publication:PR Newswire
Date:Jul 2, 1993
Words:339
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