College Construction Loan Insurance Association on Tuesday insured its first municipal new issue, an $8.5 millon sale by the New York State Dormitory Authority.

St. John Fisher College in Rochester, N.Y., has the distinction of being the first higher education institution in the country to have debt enhanced by the federally chartered insurer.

The insured deal gave the first peek into how Connie Lee plans to pursue its business strategy, and it appears the newest primary insurer is going to walk a very thin line along its congressionally defined mandate.

Although St. John Fisher College has not borrowed directly in the public markets since the early 1960s, the private liberal arts college was given a shadow rating of "A" in the not-too-distant past, according to Alan Norton, vice president of financial affairs at St. John Fisher.

"There's been at least one listing that came out where I believe we had an A rating," Mr. Norton said.

In Connie Lee's enabling legislation, the firm was restricted from insuring any but the "top three" tiers of rated bonds, a move that was meant to preserve an already vibrant private market from federal involvement. Most market sources interpret "top three" to mean A-rated credits and above.

The most recent sale that included the college was a pooled dormitory authority issue that was rated triple-A thanks to insurance by Financial Guaranty Insurance Co., Mr. Norton said.

Officials at both Standard & Poor's Corp., which rates Connie Lee's claims-paying ability AAA, and Moody's Investors Service, which does not rate Connie Lee, were unavailable late yesterday.

A spokeswoman for Connie Lee said she knew of no underlying rating for St. John Fisher College.

The $8.3 million does point up the typically dire need for low cost financing. Mr. Norton, noting many campus buildings were "worn out," said $7.3 million of the proceeds are destined for renovation of existing residences, while the remaining $1 million is for construction of academic computing facilities, among other things.

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