WASHINGTON — The Internal Revenue Service is auditing $147.5 million of auction-rate securities issued by the New Mexico Hospital Equipment Loan Council on behalf of the nonprofit Presbyterian Healthcare Service in 2004 and refunded in 2008.

The council disclosed that it had been notified about the audit by the IRS in a material event notice the issuer filed Wednesday with the Municipal Securities Rulemaking Board’s EMMA system.

“Management of PHS has no reason to believe that the examination is other than random and routine,” the council said in its notice.

It said the IRS “has advised that it routinely examines municipal debt issuance for compliance with federal tax requirements” and has requested copies of documents related to the 2004 bonds.

Both PHS and the council plan to fully cooperate with the IRS, according to the notice.

The proceeds of the bonds were to have been loaned to PHS and used to finance the purchase of land, as well as the construction and equipping of health care facilities in the state. The proceeds also were to be used to refund bonds previously issued by Albuquerque, according to the offering statement.

The bonds were insured by MBIA Insurance Corp. Goldman, Sachs & Co. underwrote them, Sherman & Howard LLC was bond counsel, and Jones Day was underwriter’s counsel. The same parties participated in the 2008 refunding transaction.

Neither Deborah Gorenz, the council’s president, nor Kay Naranjo, its finance director, could be reached for comment.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.