DALLAS — The Louisiana State Bond Commission has temporarily postponed refunding $500 million of outstanding state general obligation bonds until the Internal Revenue Service completes a routine audit of some of the issues.
The commission gave its go-ahead last month to a plan to refund up to $600 million of outstanding GO bonds, which director Whit Kling Jr. said would save the state $40 million in debt service through 2022.
However, several of the issues are involved in what Kling said was a routine, random audit by the IRS.
The commission voted unanimously to delay the refunding until the audit is complete to avoid any problems with the sale.
The panel directed staff to quickly provide all information requested by the IRS auditors in an effort to have the audit completed as soon as possible.
Freda Johnson, president of Government Finance Associates Inc., Louisiana’s financial adviser, said removing the audited issues from the refunding schedule would reduce the savings to the state. She said it would be better to wait until all the issues that meet the threshold for refunding can be included.
“We have the preliminary official statement ready, but we’ll do a fresh POS that will qualify as many issues as possible,” she said.
Johnson said the refunding would occur soon after the IRS audit is complete.
The commission also approved the conversion of two issues of second-lien gasoline and fuels tax bonds issued in 2009 to SIFMA-rate notes to finance constitutionally mandated transportation projects.
At its meeting in March, the commission approved the conversion of the $200 million A-1 series of bonds to SIFMA-rate notes. The plan approved at Thursday’s meeting included the $155 million of A-2 series bonds, which were issued as taxable Build America Bonds.
JPMorgan Chase Bank has agreed to extend for another 90 days the line of credit it provided for the 2009 bonds, The line of credit was to expire May 6,
The conversion is expected to occur well before the extended line of credit would expire in August.