The New Orleans City Council’s budget committee last week approved a plan to refinance an estimated $310 million of outstanding debt.
The refunding proposals include $150 million of bonds issued in 1998 and 2004 to finance street projects and $160 million of bonds sold in 2000 for the firefighters pension fund.
The council is expected to consider the refinancing June 7. If council members approve the plan, the proposal would go before the State Bond Commission on June 21.
Chief administrative officer Andy Kopplin said the taxable pension obligation bonds contained a swap insured by Ambac Assurance Corp., but Ambac is no longer writing new business.
Debt service on the bonds is about $19 million a year, Kopplin told the committee, but a $115 million balloon payment is due in March 2013.
Refinancing the outstanding pension obligation bonds for 20 years would avoid the 2013 payment and keep debt service level at $19 million a year, including a swap termination fee, according to Kopplin.
The refunding bonds will be supported by property tax revenue, he added, which would remove an unsecured debt from the city’s books.
The refunding will include certificates of indebtedness issued in 2004 to settle legal judgments.
Kopplin said New Orleans plans to issue $40 million of general obligation bonds later this year for street upgrades and improvements.
The Board of Liquidation, City Debt, which oversees the issuance and payment of the city’s general obligation bonds, said refinancing the outstanding street bonds could provide $26 million of present-value savings.
The pension obligation bonds are rated Baa3 by Moody’s Investors Service and BBB-minus by Standard & Poor’s.
The city’s GO debt is rated A3 by Moody’s and A-minus by Fitch Ratings.
