June 25 A sale of $185 million of revenue bonds
on Wednesday for Detroit's public lighting authority had no
problem finding buyers despite the fact the city remains in
The bond issue, which was sold through the Michigan Finance
Authority, was 2.5 times oversubscribed, receiving 35
institutional orders and several dozen more from retail
accounts, according to a statement from Michigan officials.
The overall interest cost for the bonds, which carried
serial maturities from 2015 through 2034 and term due dates in
2039 and 2044, was 4.53 percent.
"As anticipated, investors did their homework and
demonstrated an appreciation for the credit strength of our
deal," said Odis Jones, the lighting authority's chief executive
officer, in the statement.
Domenic Vonella, managing analyst at Municipal Market Data,
a unit of Thomson Reuters, said demand was strongest for bonds
due within 10 years.
"Demand on this credit 10 years and shorter might also
directly be related to the utility debt service structure and
its exclusion from any Detroit debt restructuring," he said.
Ahead of the pricing, credit rating agencies said the tax
revenue earmarked for bond payments will not become embroiled in
the city's bankruptcy case under a federal court order. The
bonds received investment grade ratings of A-minus from Standard
& Poor's Ratings Services and BBB-plus from Fitch Ratings.
The bonds, which were priced through Citigroup, are secured
by a first lien on Detroit's 5 percent tax on electric, gas and
local telephone utility services.
Proceeds from the deal, which marked the first public
offering of debt to repair Detroit's dilapidated public
lighting, will be used in part to take out $60 million of
floating rate bonds the city privately placed with Citibank in
December to jump-start improvements to the system.
(Reporting by Karen Pierog; Editing by Dan Grebler)