OAR 170-040-0040
Approval of Bond Anticipation Notes Pledged by Depositories
(1)
Bond anticipation notes issued, sold or assumed by an authority under ORS 441.560 (Borrowing) may be pledged as collateral by a depository only after the depository has received written approval from the Office of the State Treasurer (OST). However, the OST will not accept requests for and approve such bond anticipation notes as collateral, unless and until written notice is provided to depositories that, from a date designated in the notice, OST will begin to accept such requests and evaluate the acceptability of such notes as collateral.(2)
After receipt of the notice described above, the depository shall submit a written request to the OST containing the following information:(a)
The name of the note issuer;(b)
The original principal balance of the note;(c)
The current unpaid principal balance of the note;(d)
The maturity date of the note;(e)
Whether the note may be repaid prior to maturity;(f)
The credit rating (if applicable) of the issuer;(g)
The credit enhancement (such as insurance), if any, of the note;(h)
Whether an event of default has ever occurred under the note; and(i)
Whether the issuer has defaulted with respect to the payment of principal or interest on any of its notes or similar obligations within the preceding 10 years or during the period of its existence if that is less than 10 years.(3)
The OST will permit a note to be pledged as security only if:(a)
The issuer has not been in default with respect to the payment of principal or interest on any of its obligations within the preceding 10 years or during the period of its existence if that is less than 10 years;(b)
If rated by a rating agency, the issuer’s general obligations have a credit rating of AA or Aa;(c)
If the note is credit enhanced, the provider of the credit enhancement has a credit rating of AA or Aa; or(d)
OST determines, based on the information submitted to it, that the note is of sufficiently high credit quality that it may be pledged as collateral.(4)
If the OST determines that there is an insufficient market in bond anticipation notes issued, sold or assumed by an authority under ORS 441.560 (Borrowing) to provide for the efficient trading and liquidation of such bond anticipation notes, OST will value bond anticipation notes issued, sold or assumed by an authority under 441.560 (Borrowing) at seventy-five percent of their outstanding principal amount for purposes of calculating whether adequate collateral has been pledged by a depository with its custodian, as required under ORS Chapter 295 (Depositories of Public Funds and Securities).
Source:
Rule 170-040-0040 — Approval of Bond Anticipation Notes Pledged by Depositories, https://secure.sos.state.or.us/oard/view.action?ruleNumber=170-040-0040.