[Federal Register Volume 59, Number 213 (Friday, November 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-27403]


[[Page Unknown]]

[Federal Register: November 4, 1994]


Rural Telephone Bank

 

Determination of the 1994 Fiscal Year Interest Rates on Rural 
Telephone Bank Loans

AGENCY: Rural Telephone Bank, USDA.

ACTION: Notice of 1994 fiscal year interest rates determination.

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SUMMARY: In accordance with 7 CFR 1610.10, the Rural Telephone Bank 
fiscal year 1994 cost of money rates have been established as follows: 
6.15% and 6.40% for advances from the liquidating account and financing 
account, respectively (fiscal year is the period beginning October 1 
and ending September 30).
    Except for loans approved from October 1, 1987 through December 21, 
1987 where borrowers elected to remain at interest rates set at loan 
approval, all loan advances made during fiscal year 1994 under bank 
loans approved prior to fiscal year 1992 shall bear interest at the 
rate of 6.15% (the liquidating account rate). All loan advances made 
during fiscal year 1994 under bank loans approved during or after 
fiscal year 1992 shall bear interest at the rate of 6.40% (the 
financing account rate).
    The calculation of the Bank's cost of money rates for fiscal year 
1994 for the liquidating account and the financing account are provided 
in Tables 1a and 1b. Since the calculated rates are greater than the 
minimum rate (5.00%) allowed under 7 U.S.C. 948(b)(3)(A), the cost of 
money rates for the liquidating account and financing account are set 
at 6.15% and 6.40%, respectively. The methodology required to calculate 
the cost of money rates is established in 7 CFR 1610.10(c).

FOR FURTHER INFORMATION CONTACT: Matthew P. Link, Director, Rural 
Telephone Bank Management Staff, Rural Electrification Administration, 
room 2832, South Building, U.S. Department of Agriculture, Washington, 
DC 20250, telephone number (202) 720-0530.

SUPPLEMENTARY INFORMATION: The Federal Credit Reform Act of 1990 
(``Credit Reform'') (2 U.S.C. 661a, et seq.) implemented a system to 
reform the budgetary accounting and management of Federal credit 
programs. Bank loans approved on or after October 1, 1991, are 
accounted for in a different manner than Bank loans approved prior to 
fiscal year 1992. As a result, the Bank must calculate two costs of 
money rates: (1) The cost of money rate for advances made from the 
liquidating account (advances made during fiscal year 1994 on loans 
approved prior to fiscal year 1992) and (2) the cost of money rate for 
advances made during fiscal year 1994 on loans approved on or after 
October 1, 1991 (otherwise referred to as loans from the financing 
account).
    The cost of money rate methodology is the same for both accounts. 
It develops a weighted average rate for the Bank's cost of money 
considering total fiscal year loan advances; the excess of fiscal year 
loan advances over amounts received in the fiscal year from the 
issuances of Class A, B, and C stocks, debentures and other 
obligations; and the costs to the Bank of obtaining funds from these 
sources.

Sources and Costs of Funds--Liquidating Account

    During fiscal year 1994, the Bank was authorized to pay the 
following dividends: The dividend on Class A stock was 2.00% as 
established in amended section 406(c) of the Rural Electrification Act; 
no dividends were payable on Class B stock as specified in 7 CFR 
1610.10(c); and the dividend on Class C stock was established by the 
Bank at 7.5%.
    In accordance with Section 406(a) of the RE Act, the Bank did not 
issue Class A stock in fiscal year 1994. Total advances for the 
purchase of Class B stock and cash purchases for Class B stock were 
$2,110,537. Rescissions of loan funds advanced for Class B stock 
amounted to $1,679,067. Thus, the amount received by the Bank from the 
issuance of Class B stock, per 7 CFR 1610.10(c), was $431,470 
($2,110,537-1,679,067). The total amount received by the Bank in fiscal 
year 1994 from the issuance of Class C stock was $16,590.
    The Bank did not issue debentures or any other obligations related 
to the liquidating account in fiscal year 1994. Consequently, no cost 
was incurred related to the issuance of debentures subject to 7 U.S.C. 
948(b)(3)(D).
    The excess of fiscal year 1994 loan advances from the liquidating 
account over amounts received from issuances of stocks, debentures, and 
other obligations amounted to $54,082,837. The cost associated with 
this excess is the historical cost of money rate as defined in 7 U.S.C. 
Sec. 948(b)(3)(D)(v). The calculation of the Bank's historical cost of 
money rate for advances from the liquidating account is provided in 
Table 2a. The methodology required to perform this calculation is 
described in 7 CFR 1610.10(c). The cost for money rates for fiscal 
years 1974 through 1987 are defined in section 408(b) of the RE Act, as 
amended by Pub. L. 100-203, and are listed in 7 CFR 1610.10(c) and 
Table 2a herein.

Sources and Costs of Funds--Financing Account

    During fiscal year 1994, the Bank was authorized to pay the 
following dividends: The dividend on Class A stock was 2.00% as 
established in amended section 406(c) of the Rural Electrification Act; 
on dividends were payable on Class B stock as specified in 7 CFR 
1610.10(c); and the dividend on Class C stock was established by the 
Bank at 7.5%.
    In accordance with Section 406(a) of the RE Act, the Bank did not 
issue Class A stock in fiscal year 1994. Total advances for the 
purchase of Class B stock and cash purchases for Class B stock were 
$2,714,191. Since there were no rescissions of loan funds advanced for 
Class B stock, the amount received by the Bank from the issuance of 
Class B stock, per 7 CFR 1610.10(c), was $2,714,191. No amounts were 
received in fiscal year 1994 from the issuance of Class C stock 
associated with the financing account.
    During fiscal year 1994, issuances of debentures or any other 
obligations related to the financing account were $17,346,446 at an 
interest rate of 6.65% and $34,478,473 at an interest rate of 6.77%.
    The excess of fiscal year 1994 loan advances from the financing 
account over amounts received from issuances of stocks, debentures, and 
other obligations amounted to $2,299,792. The cost associated with this 
excess is the historical cost of money rate as defined in 7 U.S.C. 
948(b)(3)(D)(V). The calculation of the Bank's historical cost of money 
rate for advances from the financing account is provided in Table 2b. 
The methodology required to perform this calculation is described in 7 
CFR 1610.10(c).

    Dated: October 31, 1994.
Wally B. Beyer,
Governor, Rural Telephone Bank.

                     Table 1a.--Liquidating Account Rural Telephone Bank Cost of Money Rate                     
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                                                                                                    (Amount  x  
              Source of bank funds                    Amount         Cost rate       Amount  x    rate)/advances
                                                                     (percent)       cost rate       (percent)  
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FY 1994 Issuance of Class A Stock...............              $0            2.00              $0          0.0000
FY 1994 Issuance of Class B Stock...............         431,470            0.00               0          0.0000
FY 1994 Issuance of Class C Stock...............          16,590            7.50           1,244          0.0023
FY 1994 Issuance of Debentures and Other                                                                        
 Obligations....................................               0  ..............               0          0.0000
Excess of Total Advances Over FY 1994 Issuance..      54,082,837            6.20       3,353,136          6.1491
                                                 ---------------------------------------------------------------
      Total FY 1994 Advances....................      54,530,897           (\1\)           (\1\)            6.15
                                                 ===============================================================
                                                  ..............           (\2\)           (\2\)            5.00
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\1\Calculated cost of money rate.                                                                               
\2\Minimum cost rate allowable.                                                                                 


                      Table 1b.--Financing Account Rural Telephone Bank Cost of Money Rate                      
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                                                                                                    (Amount  x  
              Source of bank funds                    Amount         Cost rate       Amount  x    rate)/advances
                                                                     (percent)       cost rate       (percent)  
----------------------------------------------------------------------------------------------------------------
FY 1994 Issuance of Class A Stock...............              $0            2.00              $0          0.0000
FY 1994 Issuance of Class B Stock...............       2,714,191            0.00               0          0.0000
FY 1994 Issuance of Class C Stock...............               0            7.50               0          0.0000
FY 1994 Issuance of Debentures and Other                                                                        
 Obligations....................................      17,346,446            6.65       1,153,539          2.0295
                                                      34,478,473            6.77       2,334,193          4.1067
Excess of Total Advances Over 1994 Issuances....       2,299,792            6.50         149,486          0.2630
                                                 ---------------------------------------------------------------
      Total FY 1994 Advances....................      56,838,902           (\1\)           (\1\)            6.40
                                                 ===============================================================
                                                  ..............           (\2\)           (\2\)            5.00
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\1\Calculated cost of money rate.                                                                               
\2\Minimum cost rate allowable.                                                                                 


                  Table 2a.--Rural Telephone Bank Historical Cost of Money Liquidating Account                  
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                                                                                                  (Advances  x  
                                            Bank cost of        Bank loan        Advances  x    cost rate)/total
               Fiscal year                 money (percent)      advances          cost rate         advances    
                                                                                                    (percent)   
----------------------------------------------------------------------------------------------------------------
1974....................................              5.01      $111,022,574         5,562,231             0.254
1975....................................              5.85       130,663,197         7,643,797             0.349
1976....................................              5.33        99,915,066         5,325,473             0.243
1977....................................              5.00        80,907,425         4,045,371             0.184
1978....................................              5.87       142,297,190         8,352,845             0.381
1979....................................              5.93       130,540,067         7,741,026             0.353
1980....................................              8.10       199,944,235        16,195,483             0.738
1981....................................              9.46       148,599,372        14,057,501             0.641
1982....................................              8.39       112,232,127         9,416,275             0.429
1983....................................              6.99        93,402,836         6,528,858             0.298
1984....................................              6.55        90,450,549         5,924,511             0.270
1985....................................              5.00        72,583,394         3,629,170             0.165
1986....................................              5.00        71,852,383         3,592,619             0.164
1987....................................              5.00        51,974,938         2,598,747             0.118
1988....................................              5.00       119,488,367         5,974,418             0.272
1989....................................              5.00        97,046,947         4,852,347             0.221
1990....................................              5.00       107,694,991         5,384,750             0.246
1991....................................              5.43       163,143,075         8,858,669             0.404
1992....................................              6.14        84,940,822         5,215,366             0.238
1993....................................              6.05        84,605,366         5,118,625             0.233
                                         -----------------------------------------------------------------------
      Total advances....................  ................     2,193,304,921             (\1\)              6.20
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\1\Cost of money rate.                                                                                          


                   Table 2b.--Rural Telephone Bank Historical Cost of Money Financing Account                   
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                                                                                                  (Advances  x  
                                            Bank cost of        Bank loan        Advances  x    cost rate)/total
               Fiscal year                 money (percent)      advances          cost rate         advances    
                                                                                                    (percent)   
----------------------------------------------------------------------------------------------------------------
1992....................................              7.38        $4,056,250          $299,351             1.073
1993....................................              6.35        23,839,200         1,513,789             5.427
                                         -----------------------------------------------------------------------
      Total advances....................  ................        27,895,450             (\1\)              6.50
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\1\Cost of money rate.                                                                                          

[FR Doc. 94-27403 Filed 11-3-94; 8:45 am]
BILLING CODE 3410-15-M