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TENNESSEE LOCAL DEVELOPMENT AUTHORITY'S $15.3 MILLION BONDS RATED 'A' -- FITCH FINANCIAL WIRE --

 TENNESSEE LOCAL DEVELOPMENT AUTHORITY'S $15.3 MILLION BONDS RATED 'A'
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Dec. 13 /PRNewswire/ -- Tennessee Local Development Authority's $15.27 million Community Provider Pooled Loan Program Revenue Bonds, Series 1992 are rated "A" by Fitch. This is the first time Fitch has been asked to rate this issuer. The credit trend is stable. These bonds, the first offering for a new program, are expected by negotiation with Dain Bosworth Inc. and Morgan Keegan & Company Inc. on Dec. 17.
 The authority has had a long record of success in providing loans to local governments for sewage, water, energy recovery, and solid waste resource recovery capital projects. This newly constituted program is separately secured from issues previously sold under outstanding state loans programs, and is operated through a separate special trust in the state treasury. Proceeds of this issue will be used to refinance existing mortgages, and to make loans to acquire, construct or expand facilities for certain state-licensed corporations which provide community mental health and mental retardation services for the Department of Mental Health and Mental Retardation.
 The loan agreements between the authority, department, and community providers securing the bonds require the providers to make monthly payments sufficient for debt service. Ultimate security protection depends on legislative appropriations to the department. State grant funds may be withheld and paid directly to the authority if the providers fail to make required payments. Debt service on this issue, with interest assumed at 10 percent, represents 10.6 percent of the state grant funds available to the participating providers in 1989-90 and 5.6 percent of their total revenues. Further, there is a statutory requirement that the state replenish any deficiency in the reserve account from state funds appropriated to the department. The security structure effectively insulates bondholders from the risks normally associated with this type of program. The cabinet status of the department and the use of the state's division of bond finance to monitor and manage the program is further evidence of its policy nature and the financial commitment from this high quality state.
 The bonds include $8 million serials due Oct. 1, 1992-2006, $2,315,000 terms due Oct. 1, 2011, and $4,955,000 terms due Oct. 1, 2021. Bonds will be callable at prices and dates yet to be determined and further subject to special redemption at any time as a result of facility foreclosure, from insurance proceeds or condemnation awards.
 -0- 12/13/91
 /CONTACT: Ruth Corson Maynard of Fitch, 212-908-0596/ CO: Tennessee Local Development Authority ST: Tennessee IN: SU: RTG


TS -- NY024 -- 2343 12/13/91 11:41 EST
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Publication:PR Newswire
Date:Dec 13, 1991
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