Oakland County, Mich., May Delay Bond Deal

CHICAGO — Oakland County, Mich. reportedly may delay a $350 million bond sale it had planned for next week.

The closely watched transaction would be largest borrowing brought to market by a Michigan local government since Detroit filed for bankruptcy.

At least three other Michigan issuers postponed their deals amid weak interest from investors skittish about buying local Michigan general obligation bonds.

Officials at triple-A rated Oakland County said they may delay the deal only due to their own overly ambitious timeline, not because of market fallout from Detroit's Chapter 9, according to a report in Bloomberg.

The county originally planned to sell the debt Sept. 10. Officials will know by this week whether they will hold the deal, the report said.

Standard & Poor's and Moody's Investors Service have both affirmed their triple-A ratings on Oakland County ahead of the deal.

Since Detroit filed for Chapter 9 bankruptcy protection July 18, the only three negotiated deals of more than $10 million that were on the calendar from Michigan locals — from Genesee County, Saginaw County and Battle Creek — were delayed.

The deals all featured general obligation bonds, which are the target of particular market concern since Detroit emergency manager Kevyn Orr has proposed treating the city's GO debt as unsecured.

The Saginaw County and Oakland County deals, both for retirement obligations, would be taxable GOs.

Oakland's $350 million of debt would refinance certificates it issued in 2007 to pay off its other post-employment benefits liability. The bond issue is allowed under a relatively new state law that lets certain governments issue long-term debt to pay off their OPEB obligations.

The county currently pays 6.2% on the certificates, and expects the interest rate on the bonds to be in the low 3% range.

In 2007, Oakland was the first local government in Michigan to fund retiree health care costs when it issued $570 million of taxable certificates of participation.

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