U.S. Central Credit Union has negotiated a $1 billion revolving credit facility from a syndicate of 39 foreign and domestic banks.

The facility is meant to complement U.S. Central's current means of raising liquidity, which include informal agreements with banks as well as medium-term-note and commercial paper programs.

"This is simply an additional component of our maintaining access to liquidity in the marketplace," said Charles Purvis, senior vice president of financial marketing for $20.2 billion-asset U.S. Central.

U.S. Central acts as the industry's primary liquidity facility. Credit unions invest surplus funds in corporate credit unions, which in turn park money in U.S. Central.

Liquidity has been a growing, if not yet serious, concern in the industry since the lending boom in 1994. In that year, as well as in 1995, some corporates found themselves in the unusual position of lending, rather than merely investing, money.

Indeed, the origins of the facility go back six months, when liquidity was on everyone's mind, Mr. Purvis said.

"We saw this as an opportune time to set up the facility," Mr. Purvis said.

Neither Mr. Purvis nor corporate credit union officials said that the facility would be tapped soon. Rather, it is insurance against the possibility of a liquidity squeeze.

"This will benefit corporates," said Jane Sansone, chief executive of Eastern Corporate Federal Credit Union, Woburn, Mass. "This will be an additional option for us when we need it."

Chase Securities arranged the facility and Chase Manhattan Bank is the administrative and collateral agent.

The arrangement consists of a $500 million 364-day secured revolving credit facility and a $500 million three-year secured credit facility.

Because the arrangement calls for a committed credit facility, the banks are compelled to put up money at request, Mr. Purvis said. Under the previous informal arrangements, banks could outlay funds at their discretion.

"Regardless of their circumstances, if we ask for additional liquidity they provide it," Mr. Purvis said.

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