Loomis Union Elem SD, CA TRANs Rtd SP-1+ by S&P

Business Wire, July 25, 1997

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 7/25/97 --Standard & Poor's today has assigned its 'SP-1'-plus rating to Loomis Union Elementary School District, Calif.'s $1.6 million 1997 TRANs due Aug. 15, 1998.

The rating reflects the district's:

-- General obligation pledge;

-- Early set-aside of pledged monies in a note repayment account; and

-- Strong debt service coverage by legally available resources at maturity.

The TRANs are payable from first available unrestricted fiscal 1998 revenues, as well as any other monies that are legally available. First available revenues are required to be segregated in a separate note repayment account sufficient to pay debt service on the TRANs in January 1998 ($533,334), February 1998 ($533,333), and April 1998 ($533,333, plus an amount sufficient to pay interest). Projected coverage by net available general fund cash is strong at 1.53 times (x) at note maturity.

The district, located in Placer County, ended fiscal 1996 with an audited unreserved general fund balance of $768,000 (11.1% of expenditures). Estimated actuals for 1997 indicate a slight decrease in this position to a still good $707,000 (8.8% of expenditures). The 1998 budget is balanced with a similar ending position. The district's operating funds are invested in the Placer County investment pool. Standard & Poor's has determined that while there are some weaknesses in the pool, liquidity has improved from last year, with 65% of the portfolio maturing within 90 days. As of March 31, 1997, the pool had a weighted average maturity of 295 days. (See CreditWeek Municipal, May 19, 1997.)

The school district intends to use a paying agent who will invest the note proceeds in a guaranteed investment contract (GIC). Prior to closing on the TRANs, Standard & Poor's will review the paying agent agreement to ensure that it meets Standard & Poor's requirements for paying agents to act in a trust capacity when holding TRAN repayment accounts. The GIC provider must be rated at least double-'A'-minus by Standard & Poor's to support an 'SP-1'-plus TRAN rating. -- CreditWire

CONTACT: Tammy Eng-Gonzalez, San Francisco (1) 415-765-5019

Jeffrey Thiemann, San Francisco (1) 415-765-5006