WASHINGTON - State revolving funds that rely on investment returns to subsidize loans should be worried about unexpected losses in liquidity and declining future returns, Moody's Investors Service analysts said in a report yesterday.

Many of the revolving funds are considering terminating guaranteed investment contracts with struggling banks and financial institutions and switching to Treasuries and state and local government series securities, Moody's said in a "special comment" on U.S. public infrastructure yesterday.

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