CHICAGO - Detroit Public Schools is teeing up $197 million of local government loan program revenue bonds.
The transaction will refinance outstanding bonds issued in 2005 maturing from 2016 through 2025, according to preliminary bond documents.
They are unlimited-tax general obligation bonds secured by ad valorem property tax pledge and backed by the state's pledge to cover payments if the long-troubled district is unable to make payments.
If the district fails to make debt-service payments, the Michigan Treasurer is required under law to make principal and interest payments when due.
Standard & Poor's rates the bonds AA-minus and Fitch Ratings AA based on the state program.
JP Morgan and Loop Capital Markets are the underwriters. Bodman PLC is bond counsel.
DPS has been under state controlled emergency management since 2009. Despite the nearly six years of state control, the district faces a $170 million deficit as of fiscal 2015. That's down from $327 million in 2010, but the improvement is due largely to the issuance of deficit bonds in 2011, according to Moody's Investors Service, which maintains junk ratings on the district.
