Getty Trust plans tax-exempt COPs issue; first time triple-A credit enters market.

The nonprofit J. Paul Getty Trust is planning a $110 million issuance of tax-exempt certificates of participation next month to fund a portion of the $733 million Getty Center art museum and administration complex in west Los Angeles.

Standard & Poor's Corp. and Moody's Investors Service rate the certificates triple-A. The rating agencies pointed out that the trust is entering the credit market for the first time and has no additional borrowing plans.

Established in 1953, the trust is one of the nation's largest private operating foundations, with $5.6 billion in total assets. The trust is best known as the operator of the J. Paul Getty Museum in Malibu, Calif

The Moody's Aaa rating reflects that the borrowing is relatively modest when compared with the trust's "unbelievable amount of cash and investments," said Moody's vice president Howard Cure.

Revenues from parking fees, bookstore sales, and food service will support debt service on the issue, Cure said. Legal security for payments of the certificates is a general obligation of the trust.

Standard & Poor's also cited the trust's "overwhelming capacity to pay debt service" in assigning its AAA rating to the certificates said Lisa Danzig, a Standard & Poor's director. The $110 million of certificates combined with funds accumulated by the trust expressly for the project will form the entire financing package, she said.

Danzig said the certificates are expected to be sold as fixed-rate securities, periodic auction reset securities, and inverse floating-rate securities.

John Blondel, a vice president with Goldman, Sachs & Co., underwriter of the negotiated transaction, said more details on the deal's structure would be contained in a preliminary official statement scheduled to be distributed next week. Blondel said pricing is tentatively set for the week of Jan. 10

The certificates will be issued through the California Statewide Communities Development Authority, a joint powers authority that has issued tax-exempt financings on behalf of more than 30 nonprofit organizations since 1991, said Jerry Burke, a principal in HB Capital Resources Ltd., financial adviser to the authority.

Burke said the Development Authority was authorized to issue the certificates on behalf of the trust after the Los Angeles City Council adopted a resolution in support of the project earlier this month.

Getty Center, a 110-acre project just west of the Interstate 405 Freeway, is expected to be completed in 1996. The complex includes administrative offices, an auditorium, lecture halls, a dining facility, a parking structure, and an admission-free museum set to open in 1997.

Ruth Goldway, public affairs manager for the trust, located in Santa Monica, Calif., said she could not discuss the transaction until next week

Burke said that Getty Center would provide "a clear public benefit" and that the financing "is an appropriate use of tax-exempt powers." He said Getty Center will bring a "huge economic boost to Los Angeles in employment, tourist dollars. and other benefits."

Burke said the underwriting team "expects the certificates to sell extremely well. This is a particularly strong credit."

However, mutual fund portfolio managers have not yet been approached on the issue, so expression of buyer interest in the transaction is premature.

A spokeswoman for the Franklin Group of Funds said on Monday that portfolio managers and municipal bond researchers at that firm have not "heard anything on this issue. Nobody has contacted them yet."

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