DALLAS - East Baton Rouge Parish intends to take $110 million of sales-tax-supported road and street improvement bonds to market today, but officials will watch the market before deciding whether to issue the debt as scheduled.
"We are going to take a good look at the market," said Richard Leibowitz of Breazeale, Sachse & Wilson LLP, bond counsel for the combined Louisiana city-parish government.
"We've seen some marked improvements for fixed-rate bonds. If the market is where the underwriters and the financial adviser want it to be, the parish will have a retail period and then if necessary we will complete the pricing with institutional sales on Wednesday."
If the market does not cooperate, Leibowitz said, the bonds will be pulled back and another attempt would be made later this week or next week.
Citi is the senior underwriter, with Merrill Lynch & Co. as co-senior manager. Co-managing underwriters are Morgan Keegan & Co., Seibert Brandford Shank & Co., Stephens Inc., and Jackson Securities LLC.
Government Consultants of Louisiana Inc. is the parish's financial adviser. The bonds are insured by Assured Guaranty.
The debt has unenhanced ratings of A-plus from Fitch and Standard & Poor's and A2 from Moody's Investors Service. With insurance, the bonds are rated Aa2 by Moody's and AAA by Standard & Poor's and Fitch.
"There are fewer and fewer bond insurers out there with the potential to make a difference, and Assured Guaranty is one of them," Leibowitz said.
The parish could sell the debt without bond insurance, he added, but the enhancement it provides is a good value.
"The parish could certainly access the debt market based on its underlying ratings, so that is not an issue," Leibowitz said. "But with bond insurance, the scales are much better. Bond insurance just makes sense."
The bonds are supported by 70% of the revenue from a parish-wide 0.5% sales tax. The tax was first collected in 1990 and renewed by voters several times since to finance a pay-as-you-go road improvement plan.
In September 2005 voters in the parish extended the tax through 2030. At the same time, the use of a majority of the revenue to support bonds for the so-called Green Light Plan was authorized. The plan was designed to help relieve congestion caused by an influx of new residents after hurricanes Katrina and Rita devastated New Orleans and much of southern Louisiana in 2005.
The total Green Light Plan is expected to cost $800 million. The parish plans to issue approximately $300 million of bonds for the road program.
The parish issued $125 million of sales tax bonds for the road program in 2006 and in 2008. It also refinanced $92.5 million of adjustable-rate bonds - issued in 2006 and insured by Financial Guaranty Insurance Co. - with a negotiated sale of $94.2 million of adjustable-rate road sales tax bonds enhanced by an irrevocable letter of credit.
Leibowitz said the parish will probably issue another $60 million of road bonds in early 2010, and $125 million of sewer bonds later this year.
Parish President-Mayor Melvin "Kip" Holden said earlier this month that he intends to bring an economic development and infrastructure bond issue to voters later this year that's similar to a $989 million proposal rejected in November by a margin of 51% to 49%.
