Business Wire

Fitch Rates Oregon’s $60MM GO Vet Bonds `AA’

Fitch Rates Oregon’s $60MM GO Vet Bonds `AA’

Business Editors


Fitch rates Oregon’s $60 million general obligation veterans welfare bonds, series 81 `AA’.

In addition, the `AA’ rating on $2.2 billion outstanding state general obligations is affirmed.

The new bonds are entirely for the veterans welfare program, which funds housing mortgage loans. The program is self-supporting and current operations are positive, reversing the trend of some years ago when future deficits were threatened. Some vulnerability does remain, due to interest rate volatility. The series 81 bonds will be term bonds, with mandatory redemption, due Oct. 1, 2031 ($21,590,000) and 2042 ($38,410,000). They will be optionally callable and in addition, special redemption at par may be exercised from unexpended bond proceeds or prepayments. They are expected through negotiation with a syndicate led by Bear, Stearns & Co. Inc. and UBS Paine Webber Inc. during the week of Aug. 27. Proceeds will be used for refunding.

Oregon’s rating is based on its low level of tax-supported debt, and vibrant economic growth over the last decade, which has been reflected in very favorable financial operations. Tax-supported debt amounts to $1.5 billion, affording low ratios of $438 per capita, 0.6% of estimated full value, and 1.5% of personal income. Growth has slowed as a result of the Asian recession, and weakness in the technology sector and in recent months employment has been stable or declining. However, large fund balances have been maintained as revenues, principally the personal income tax, continued to be realized in excess of estimates through 2000-01, and the projected general fund balance for the June 30 end of the biennium is estimated at $515 million, or 5% of biennial revenues. For the 2001-03 biennium, the revenue forecast has been reduced by 1.5% to $10.84 billion. A balanced budget has been adopted.

Initiative measures concerning financial matters continue to pose uncertainty. A measure requiring state and local governments to reimburse property owners for reductions in property values resulting from use regulation has been held unconstitutional by the Circuit Court. The state has appealed the ruling.

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