SEC Division of Investment Management staff letter: Alliance Municipal Trust

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON. D.C. 20549

DIVISION OF

INVESTMENT MANAGEMENT
July 14, 1995

ACT -r Cff-- L SEON Iii tt)

RULE Mr. Bruce Senzel
Seward & Kissel
One Battery Park Plaza
PUBLIC
AVAILABILITY 'ï / ftf/9J/
New York, NY 10004
Re: Alance Municipal Trust - Genera
Portolio
Dear Mr. Senzel:
Your letter of July 13, 1995 requests our assurace that we would not recommend that the Commission tae any enforcement action under sections 17(a) and 17(d) of the Investment Company Act of 1940 ("1940 Act") and the rules thereunder if Alance Municipal Trust -General Portfolio ("Fund") and Alance Capita Management, L.P., the investment adviser to the Fund ("Aliance") effect the transaction summared below and more fully described in the letter. The Fund is a money market fund that seeks to mainta a stable net asset value per share of $1.00 and uses the amortized cost method of valuation as permitted by rule 2a-7 under the 1940 Act. The Fund holds tax and revenue anticipation notes issued by Orage County, Calorna that mature on July 19, 1995 ("Securities in the pricipal amount of ")1 $20,850,000 (approxiately 1.77% of the Fund's net assets). The Securities pay interest at a rate of 4.5 % per year, and al accrued interest on the Securities is due and payable on July 19, 1995. As a result of the Orage County bankptcy filing on December 6, 1994, the Fund was unable to obtain reliable market quotes for the Securities then held, and it determined the fair values of those Securities to be less than their amortized cost values. In December 1994, The Chase Manhatta Bank, N.A. ("Chase"), upon the application of Alance, issued a letter of credit on behal of the Fund ("LOC") in order to avoid any potential losses to shareholders of the Fund on the Securities then held by reason of the nonpayment by Orange County of pricipal and interest thereon at maturity ("LOC Arngement").2 The LOC Arngement provided for the full payment of pricipal and interest when due on the Securities then held by the Fund if Orange County failed to make In your letter of July 13, 1995, you represented that the principal amount of the Securities