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Notice

Determination of the 2007 Fiscal Year Interest Rate on Rural Telephone Bank Loans

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AGENCY:

Rural Telephone Bank, USDA.

ACTION:

Notice of 2007 fiscal year interest rate determination.

SUMMARY:

In accordance with 7 CFR 1610.10, the Rural Telephone Bank (Bank) cost of money rate has been established as 5.84% for all advances made during fiscal year 2007 (the period beginning October 1, 2006 and ending September 30, 2007). All advances made during fiscal year 2007 were under Bank loans approved on or after October 1, 1992. These loans are sometimes referred to as financing account loans.

The methodology required to calculate the cost of money rate is established in 7 CFR 1610.10(c). Because of the dissolution of the Bank, the only remaining component of the calculation of the Bank's cost of money rate for fiscal year 2007 is the rate paid by the Bank to the Treasury to borrower the funds advanced under financing account loans. Since the rate paid to the Treasury is greater than or equal to the minimum rate (5.00%) allowed under 7 U.S.C. 948(b)(3)(A), the cost of money rate is set at 5.84%.

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FOR FURTHER INFORMATION CONTACT:

Jonathan P. Claffey, Deputy Assistant Governor, Rural Telephone Bank, STOP 1590—Room 5151, 1400 Independence Start Printed Page 10221Avenue, SW., Washington, DC 20250-1590. Telephone: (202) 720-9556.

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SUPPLEMENTARY INFORMATION:

The cost of money rate methodology develops a weighted average rate for the Bank's cost of money considering total fiscal year loan advances, debentures and other obligations, and the costs to the Bank of obtaining funds from these sources. Because of the dissolution of the Bank, which was discussed at greater length in the Notice of 2006 fiscal year interest rate determination published November 30, 2006 (See 71 FR 69200), the only component described in 7 CFR 1610.10(c) that is still relevant to the determination of the Bank's cost of money interest rate is the rate paid on the issuance of debentures and other obligations [see 7 CFR 1610.10(c)(4)]. The table that has been attached to this notice in prior years will no longer be provided since the only calculation necessary to determine the interest rate for advances is the comparison of the interest rate on Treasury borrowings to the statutory minimum rate.

Progress of Dissolution of the Bank

At its quarterly meeting on August 4, 2005, the Board of Directors (the “Board”) approved a resolution to dissolve the Bank. On November 10, 2005, the liquidation and dissolution process was initiated with the signing by President Bush of the 2006 Agriculture Appropriations bill, which contained a provision lifting the restriction on the retirement of more than 5 percent of the Class A stock held by the Government. This paved the way for all Bank stock to be redeemed.

The dissolution process is now largely complete. The Government's Class A stock was redeemed on April 10, 2006; redemption payments to Class B and C shareholders began on April 11, 2006 and were completed by September 30, 2006. The final liquidation payments were made to Class A and B shareholders at the time of liquidation on November 13, 2007. The only action still to be taken is the completion of a final audit.

Sources and Costs of Funds

Due to the dissolution of the Bank, the only remaining source of funds is the borrowings from the Treasury, which are categorized as issuance of debentures or other obligations in accordance with the regulations pertaining to the setting of the interest rate for advances on Bank loans (7 CFR 1610.10(c)(4)). For fiscal year 2007, Treasury borrowings related to advances were $53,534,679 at an interest rate of 5.84%. Since this rate exceeds the minimum statutory rate of 5.00% for Bank loans, the Bank's cost of money rate for fiscal year 2007 advances is set at 5.84%.

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James M. Andrew,

Governor, Rural Telephone Bank.

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[FR Doc. E8-3561 Filed 2-25-08; 8:45 am]

BILLING CODE 3410-15-P