East Baton Rouge Parish councilors will meet this week to consider refinancing $92.2 million of variable-rate sales tax revenue bonds issued in 2006 after the ratings for Financial Guaranty Insurance Co., which insured the issue, dropped below double-A.
As a result of the FGIC problems, the interest the parish is paying on the debt rose from approximately 3% to 7.5%.
The bonds have an underlying rating of A2 from Moody’s Investors Service, AA from Standard and Poor’s, and A-plus from Fitch Ratings.
The parish’s finance committee last week passed the request for refunding to the full council without a recommendation.
The bonds are supported by revenues from a 0.5% sales tax dedicated to transportation that voters extended for 23 years in 2005. The tax generates $32 million a year.
Richard Leibowitz of Breazeale, Sachse & Wilson LLP, the parish’s bond counsel, told the committee that the parish expects to issue another $160 million to $175 million of sales tax revenue bonds later this year. The revenue not required to service existing and future debt will be used to finance road projects on a pay-as-you-go basis, he said.