[Federal Register Volume 64, Number 222 (Thursday, November 18, 1999)]
[Notices]
[Pages 63008-63011]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29865]


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DEPARTMENT OF AGRICULTURE

Rural Telephone Bank


Determination of the 1999 Fiscal Year Interest Rates on Rural 
Telephone Bank Loans

AGENCY: Rural Telephone Bank, USDA.

ACTION: Notice of 1999 fiscal year interest rates determination.

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SUMMARY: In accordance with 7 CFR 1610.10, the Rural Telephone Bank 
(Bank) fiscal year 1999 cost of money rates have been established as 
follows: 6.01% and 5.54% 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 1999 under 
Bank loans approved in fiscal years 1988 through 1991 shall bear 
interest at the rate of 6.01% (the liquidating account rate). All loan 
advances made during fiscal year 1999 under Bank loans approved during 
or after fiscal year 1992 shall bear interest at the rate of 5.54% (the 
financing account rate).
    The calculation of the Bank's cost of money rates for fiscal year 
1999 for the liquidating account and the financing account are provided 
in Tables 1 and 2. Since the calculated rates are greater than the 
minimum rate (5.00%) allowed under 7 U.S.C. Sec. 948(b)(3)(A), the cost 
of money rates for the liquidating account and financing account are 
set at 6.01% and 5.54%, respectively. The methodology required to 
calculate the cost of money rates is established in 7 CFR 1610.10(c).

FOR FURTHER INFORMATION CONTACT: Jonathan P. Claffey, Deputy Assistant 
Administrator, Telecommunications Program, Rural Utilities Service, 
1400 Independence Ave., SW., STOP 1590, South Building, Washington, DC 
20250, telephone number (202) 720-9556.

SUPPLEMENTARY INFORMATION: The Federal Credit Reform Act of 1990 
(``Credit Reform'') (2 U.S.C. Sec. 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 cost of 
money rates: (1) The cost of money rate for advances made from the 
liquidating account (advances made during fiscal year 1999 on loans 
approved prior to fiscal year 1992) and (2) the cost of money rate for 
advances made during fiscal year 1999 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

[[Page 63009]]

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 issuance of Class A, B, and C stocks, debentures and 
other obligations; and the costs to the Bank of obtaining funds from 
these sources.
    During fiscal year 1999, 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 
(RE 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 5.50%.

Sources and Costs of Funds--Liquidating Account

    In accordance with Section 406(a) of the RE Act, the Bank did not 
issue Class A stock in fiscal year 1999. Advances for the purchase of 
Class B stock and cash purchases for Class B stock were $843,911. 
Rescissions of loan funds advanced for Class B stock amounted to 
$316,910. Thus, the amount received by the Bank from the issuance of 
Class B stock, per 7 CFR 1610.10(c), was $527,001 ($843,911-$316,910). 
The amount received by the Bank in fiscal year 1999 from the issuance 
of Class C stock was $18,309.
    The Bank did not issue debentures or any other obligations related 
to the liquidating account in fiscal year 1999. Consequently, no cost 
was incurred related to the issuance of debentures subject to 7 U.S.C. 
Sec. 948(b)(3)(D).
    The excess of fiscal year 1999 loan advances from the liquidating 
account over amounts received from issuance of stocks, debentures, and 
other obligations amounted to $17,251,208. 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 also provided 
in Table 1. 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 1 herein.

Sources and Costs of Funds--Financing Account

    In accordance with Section 406(a) of the RE Act, the Bank did not 
issue Class A stock in fiscal year 1999. Advances for the purchase of 
Class B stock and cash purchases for Class B stock were $1,822,270. 
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 $1,822,270. The Bank did not receive 
any amounts in fiscal year 1999 from the issuance of Class C stock.
    During fiscal year 1999, issuance of debentures or any other 
obligations related to the financing account were $36,336,255 at an 
interest rate of 5.81%.
    The excess of fiscal year 1999 loan advances from the financing 
account over amounts received from issuance of stocks, debentures, and 
other obligations amounted to $527,207. 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 financing account is also provided in 
Table 2. The methodology required to perform this calculation is 
described in 7 CFR 1610.10(c).

    Dated: November 4, 1999.
Christopher A. McLean,
Acting Governor, Rural Telephone Bank.

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[FR Doc. 99-29865 Filed 11-17-99; 8:45 am]

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