BOARD01903

• Board Meeting Date: 11/23/1998
• Description: CF Section - Financial Matters - Lending Rate Recommendations for 1999
• Board Meetings - Doc Type: Memo

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Colorado Water Conservation Board
Department of Natural Resources
721 Centennial Building
1 313 Sherman Street
Denver, Colorado 80203
Phone: [phone]
FAX: [phone]

STATE OF COLORADO

8

Roy Romer
Governor

MEMORANDUM

lames S. Lochhead
Executive Direcror, DNR

Daries C. Lile, P.E.
Direcror, CweB

TO:

Colorado Water Conservation Board Members

. Bill Stanton, P.E., Chief, Planning and Construction ~.
Bill Green, P.E., Manager of Planning, Planning and C~nstruction13~

November 6,1998

FROM:

DATE: .

RE:

Agenda Item No. 14.b. - Water Project Construction Loan Program-
Financial Matters - Lending Rate Recommendations for 1999

Introduction

This memorandum provides a summary of two key interest rates for the last twelve
months and the staff recommendation for a lending rate structure for CWCB lending
programs for 1999, The procedures used here are identical to the ones used for
developing the 1998 lending rate structure,

Discussion

Attached is a figure with a trace of weekly yields for the 30-year "A" municipal bond and
the 30-year U.S, Treasury Bond for the period October 20, 1997 to October 12, 1998,1 As
the figure indicates, the average yield for Treasuries and municipals was 5,78 percent and
5,27 percent, respectively, for the twelve-month period,

The lending rate policy adopted by the Board in November 1997 suggests that the
average yield for the 30-year municipal bond in the preceding twelve months (rounded to
the nearest one-quarter of one percent) be used directly as the Municipal High Income
lending rate, Based on the data for October 20,1997 to October 12,1998, that rate would
be 5,25 percent. All other rates were then structured from the High Income category as
follows:

1 Standard & Poor's definition of an 'A' bond rating is: "A debt rated' A' has a strong
capacity to pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories,"