CHICAGO — Macomb County, Mich., is prepping $264 million of retiree health care bonds for market next week to pay off part of its retirement obligation.
The deal is part of a series of borrowings by local Michigan governments to fund retirement debts.
The $263.7 million limited-tax general obligation bond transaction is expected to price March 5.
Moody's Investors Service has rated the bonds Aa1 in line with its rating on the rest of the county's LTGO debt.
The county, which borders Detroit on the north, is one of several Michigan issuers that has floated retirement bonds as allowed under a 2012 law. The law was set to expire in December 2014 but lawmakers extended it to December 2015.
Proceeds will pay of an OPEB liability estimated at just over $262 million, according to a December interview with county officials.
State law permits Macomb to do the deal because its retiree health care plan will be closed to new hires starting in January 2016.
With a projected interest rate of 4% on the bonds, the county expects to pay $16.8 million a year for debt service, officials said. The debt service will remain flat for the 25-year life of the debt.
The finance team includes Public Financial Management as financial advisor, JP Morgan as underwriter and Axe & Ecklund PC as bond counsel.
Macomb's pension plan is 97% funded.
Other governments to borrow for their retirement funds include Ottawa County, Oakland County, Saginaw County and Bloomfield Hills and Kalamazoo.