Bankrupt Alabama county picks Citigroup to run $1.9 billion bond deal

BIRMINGHAM Mon Jul 15, 2013 2:50pm EDT

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BIRMINGHAM (Reuters) - Lawmakers in Alabama's bankrupt Jefferson County on Monday chose Citigroup Global Markets as senior underwriter for a planned $1.9 billion bond refinancing in late 2013 that is central to ending America's biggest municipal bankruptcy case.

The county, which last month filed a negotiated plan of adjustment with a U.S. bankruptcy court, also selected Public Resources Advisory Group to act as financial adviser for the sewer warrants deal, according to a resolution passed by county commissioners.

The county's plan filed on June 30 still must be confirmed by a federal judge but contains agreements with the biggest Wall Street creditors, such as JPMorgan Chase, that include losses of as much as 70 cents on the dollar.

The defaults and losses imposed on bondholders are on a scale not seen since the 1930s and are likely to translate into pricier borrowing by the county for decades, portfolio managers and analysts have said. The county's sewer debt is rated Ca with a negative outlook by Moody's Investors Service.

Home to Birmingham, a regional business hub and Alabama's largest city, Jefferson County received six proposals from financial firms to run the planned bond refinancing, according to the resolution.

Two public finance firms vied for the advisory slot.

Underwriting fees have yet to be settled, the resolution said.

Citigroup Global Markets is part of Citigroup Inc.

(Reporting by Melinda Dickinson in Birmingham Additional Reporting by Michael Connor in Miami; Editing by James Dalgleish, Tiziana Barghini and Chris Reese)

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Comments (1)
morbas wrote:
Municipality revenue unfairly burdens the lower 4/5th, that is why municipalities are revenue poor in a poor economy. Transaction tax burdens entrepreneurial personal businesses which must pass on costs to their clients, unfairly burdening the lower 4/5th quintile owners & clients. We need industry to be proactive to force a political constitutional change.
Nationalize the tax code eliminating all other taxation, immediately balancing the budget(s), through a margin flat income tax principle. My numbers are margin $30k single, $60K joint, income above this linear increasing rate (Income-[30k,60k])*(Income/300k)*90% [a single tax rate at less than the 1960-63 federal income rate]. This revenue proportioned per voter to (1/3rd) federal, (1/3rd) state and (1/3rd) municipality governments. The effective rate for all would be less than the 1960-1963 federal rates. Import Export fees separate from this law; business shall not be taxed. Interstate commerce Federal taxes are prohibited by constitutional law.

Jul 15, 2013 3:03pm EDT  --  Report as abuse
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