[Code of Federal Regulations]

[Title 49, Volume 4]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 49CFR260.15]



[Page 811-812]

 

                        TITLE 49--TRANSPORTATION

 

       CHAPTER II--FEDERAL RAILROAD ADMINISTRATION, DEPARTMENT OF 

                             TRANSPORTATION

 

PART 260_REGULATIONS GOVERNING LOANS AND LOAN GUARANTEES UNDER THE 

RAILROAD REHABILITATION AND IMPROVEMENT FINANCING PROGRAM--Table 

of Contents

 

                           Subpart A_Overview

 

Sec. 260.15  Credit risk premium.



    (a) Where available Federal appropriations are inadequate to cover 

the subsidy cost, a non-Federal infrastructure partner may pay to the 

Administrator a Credit Risk Premium adequate to cover that portion of 

the subsidy



[[Page 812]]



cost not covered by Federal appropriations. Where there is no Federal 

appropriation, the Credit Risk Premium must cover the entire subsidy 

cost.

    (b) The amount of the Credit Risk Premium required for each direct 

loan or loan guarantee, if any, shall be established by the 

Administrator. The Credit Risk Premium shall be determined based on the 

credit risk and anticipated recovery in the event of default, including 

the recovery of collateral.

    (c) The Credit Risk Premium must be paid before the disbursement of 

a direct or guaranteed loan. Where the borrower draws down the direct or 

guaranteed loan in several increments, the borrower may pay a portion of 

the total Credit Risk Premium for each increment equal to the proportion 

of that increment to the total amount of the direct or guaranteed loan.

    (d) Each direct loan and loan guarantee made by the Administrator 

will be included in one cohort of direct loans or one cohort of loan 

guarantees, respectively, made during that same fiscal year, or longer 

period, as may be determined by the Administrator. When all obligations 

in a cohort have been satisfied or liquidated, the amount of Credit Risk 

Premiums, paid by applicants or infrastructure partners, remaining in 

the cohort, after deductions made to mitigate losses from any loan or 

loan guarantee in the cohort, together with interest accrued thereon, 

will be repaid on a pro rata basis to each original payor of a Credit 

Risk Premium for any obligation which was fully satisfied. If the 

Administrator's estimate of the default risk cost of each loan is 

accurate, the aggregate of Credit Risk Premiums associated with each 

cohort of loans will fully offset all losses in the cohort and none will 

remain to be returned to the payees.