Sec. 5. (a) Subject to subsections (b) through (d), an authority may enter into and modify, amend, or terminate one (1) or more swap agreements that the authority determines to be necessary or desirable in connection with or incidental to the issuance, carrying, or securing of obligations. Swap agreements entered into by an authority shall:

(1) contain the provisions (including payment, term, security, default, and remedy provisions); and

(2) be with the parties;

that the authority determines are necessary or desirable after due consideration is given to the creditworthiness of the parties.

(b) The authority may not:

(1) enter into any swap agreement under this section other than for the purpose of managing an interest rate or similar risk that arises in connection with or incidental to the issuance, carrying, or securing of obligations by the authority; or

(2) carry on a business of acting as a dealer in swap agreements.

(c) A swap agreement shall be considered as being entered into in connection with or incidental to the issuance, carrying, or securing of obligations if:

(1) the swap agreement is entered into not more than one hundred eighty (180) days after the issuance of the obligations and specifically indicates the agreement's relationship to the obligations;

(2) the authority designates the swap agreement as having a relationship to the obligations;

(3) the swap agreement amends, modifies, or reverses a swap agreement described in subdivision (1) or (2); or

(4) the terms of the swap agreement bear a reasonable relationship to the terms of the obligations.

(d) Payments to be made by the authority to any other party under a swap agreement may be payable from:

(1) the same source or sources of funds from which the obligations are, will be, or may be payable; or

(2) any other lawfully available source.

(e) This chapter does not create a debt or liability of the authority or the state for purposes of any constitutional or statutory limitation.

As added by P.L.55-1994, SEC.1. Amended by P.L.273-1999, SEC.47.