CHICAGO — Detroit Public Schools will hit the market Tuesday, taking retail orders on roughly $210 million of debt and opening it up to institutional buyers Wednesday.
Siebert Brandford Shank & Co. and JPMorgan are joint book-running senior managers on the deal. The transaction includes $161 million of taxable qualified school construction bonds and $50 million of taxable Building American Bonds.
Struggling with a growing deficit and a weak economy, DPS is now in its second year under state-ordered emergency financial management. The bonds, however, are backed by Michigan as well as an unlimited-tax general obligation pledge. Michigan’s school bond qualification and loan program has earned the bonds a Aa2 from Moody’s Investors Service and a AA-minus from Standard & Poor’s.
If DPS is unable to make debt payments, the state has pledged to cover the payments through the school loan revolving fund. Moody’s gives a B1 to the district’s unenhanced debt, which totals just under $3 million of bonds issued in 1996.
Voters approved the borrowing last November as part of DPS’ $500 million capital campaign. Officials are hoping the construction program will help transform the troubled school district as well as Detroit.
