CHICAGO -- Oakland County, Mich.’s delay on its $350 million bond sale originally planned for next week has nothing to do with Detroit, a top official said Wednesday.
“It has nothing to do with Detroit or the Michigan market -- zero, nada, bupkis,” Robert Daddow, the county’s deputy executive said. “It has everything to do with still assembling the documents and we probably set too aggressive a schedule to get it done by year end.”
The county’s fiscal year ends Sept. 30. It had set the sale date for Sept. 10. The county still hopes to sell the taxable bonds this month in time for an end-of-September close, Daddow said.
All eyes, in Michigan at least, are on Oakland County as it prepares to enter the market. It would be the first large deal to come to market since Detroit declared bankruptcy July 18. At least three other issuers, including two counties, delayed sales amid anemic investor interest. But Oakland County, which is considered by ratings firms to be one of the best managed counties in the U.S., expects no such problems, Daddow said. Moody’s Investors Service and Standard & Poor’s affirmed their triple-A ratings on the issuer last week.
“I think there’s plenty of interest in our debt, and I think we’ll be okay on that issue,” Daddow said.
The finance team, led by Bank of America Merrill Lynch, will publish a schedule Monday that Daddow said should allow the deal to get done this month unless “someone drops the ball by a day or two.”
As of Wednesday, the county had yet to assemble a preliminary official statement, create marketing materials or get necessary approval from the state treasurer, Daddow said. State approval is expected Friday, he added. “I’m not happy about being in the position we’re in,” he said. “It makes it difficult to go to investors and say, Hey, buy our bonds.’”
Since Detroit filed for Chapter 9 bankruptcy protection in July, the only three negotiated deals of more than $10 million that were on the calendar from Michigan locals — from Genesee County, Saginaw County and Battle Creek — were delayed.
The deals all featured general obligation bonds, which are the target of particular market concern since Detroit emergency manager Kevyn Orr has proposed treating the city’s GO debt as unsecured.
The Saginaw County and Oakland County deals, both for retirement obligations, would be taxable GOs.
Oakland’s $350 million of debt would refinance certificates it issued in 2007 to pay off its other post-employment benefits liability. The bond issue is allowed under a relatively new state law that lets certain Michigan governments issue long-term debt to pay off OPEB obligations.
The county currently pays 6.2% on the certificates, and expects the interest rate on the bonds to be in the low 3% range.