WASHINGTON - The Washington Metropolitan Area Transit Authority will issue its first-ever long-term tax-exempt bonds under a refinancing agreement announced yesterday by U.S. Transportation Secretary Federico Pena and authority officials.

Pena hailed the agreement as a prime example of President Clinton's call to "reinvent government" and said the innovative refinancing will save taxpayers hundreds of millions of dollars.

The authority had issued $997 million of federally guaranteed bonds between 1972 and 1975. The bonds, which could not be issued as tax-exempt debt because of the federal guarantee, carry interest rates of between 7.30% and 8.35%.

The Transportation Department is responsible for repaying two-thirds of the accrued interest and the principal on the earlier bonds, while the authority is responsible for repaying one-third of the debt.

Under the plan announced yesterday, the Transit Authority will issue about $330 million of tax-exempt bonds to retire its one-third share of the old federally guaranteed debt. The bonds are expected to be sold Tuesday. Merrill Lynch & Co. is senior bookrunner on the negotiated deal.

The bonds will be issued primarily with serial maturities, though some term bonds may be included, depending on market conditions, authority officials said.

The authority has obtained an A rating from Standard & Poor's Corp. and a Baal rating from Moody's Investors Service. However, the bonds will be insured by Financial Guaranty Insurance Co., giving next week's issue a triple-A rating.

In addition to retiring roughly $330 million in federally guaranteed debt, the refinancing is expected to bring the Transit Authority more than $30 million.

As an example of what $30 million can buy, transit officials said the authority could purchase 143 new buses or undertake the rehabilitation of 14 existing Metro rail stations, transit officials said.

As the authority comes to market, the Transportation Department will borrow about $670 million from the Treasury Department to retire its two-thirds of the outstanding bonds.

The old bonds will then be called for redemption, ending the federal guarantee obligation.

The transaction is expected to reduce federal interest costs by about $11 million annually, or more than $200 million overall.

"You don't see something like this every day," said Peter Kessenich, managing director of Public Financial Management Inc. in Atlanta, financial adviser to the Transit Authority. "You don't often see an issuer go out and establish its own credit and get rid of a $1 billion federal guarantee."

The federally guaranteed bonds backed by the authority contain a net revenue pledge for repayment. The new bonds will be backed by a gross revenue pledge.

The availability of gross revenues will help support a $600 million letter of credit facility allowing the authority to implement a "fast track" construction program for the Metro rail system. The gross revenues include farebox revenues, an operating subsidy, and debt service subsidies from participating jurisdictions.

The accelerated construction program is expected to allow the completion of the 103-mile Metro rail system by 2001, instead of 2006. That could save hundreds of millions of dollars, insulating the project from five years' worth of inflation.

The authority's charter does not allow officials to enter contracts unless they have the money to pay contractors for their work. The credit line will allow the authority to accelerate the contracting process in advance of receiving grants and other moneys. The credit also will help secure a short-term commercial paper program that will be used during periods of sluggish cash flows.

Summing up the agreement, Mortimer Downey, deputy secretary of the Transportation Department., said: "Millions of Americans are taking advantage of lower interest rates to refinance home mortgages, saving themselves thousands of dollars a year in interest and freeing up disposable income to spend on other things. The federal government can he as smart as most Americans, and reap similar savings, in this case in the hundreds of millions of dollars."

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