LOS ANGELES -- A $633.4 million short-term borrowing on behalf of 282 school districts and community colleges is the largest five pooled cash-flow financings scheduled next month in California.
The California School Cash Reserve Program Authority is issuing the pool bonds via negotiation by underwriter Piper Jaffray Inc. on June 7. Proceeds will help the schools with their fiscal 1995 cash-flow management plans. The one-year bonds, which mature in July 1995, were assigned an MIG-1 rating by Moody's Investors Service yesterday.
Four other pool programs are also known to be in the works.
A statewide pool program on behalf of 60 counties and cities will be conducted by the California Statewide Communities Development Authority, and three regional pooled financings for school districts are planned in the counties of Los Angeles, Orange, and San Diego.
California, historically the nation's leading issuer of short-term tax and revenue anticipation notes, is seeing an increasing movement away from stand-alone deals and toward pooled financings, market sources said yesterday.
"The trend in California has been toward ~pool mania,'" said Diane P. Brosen, director of short-term debt rating for Standard & Poor's Corp.
Pooled short-term cash flow issuances "are really catching on in California and the rest of the country," Moody's assistant vice president Kevork Khrimian said.
While the number of pool participants appears to be growing in California, the dollar amount of the pools is shrinking compared with last year, participants said.
For example, in fiscal 1994, which ends June 30, the Statewide Communities Development Authority issued $283 million of pooled bonds. This year, the dollar amount will be less because of changes in the IRS arbitrage rebate regulations that are more restrictive, said Jerry Burke, the authority's financial adviser. The authority has not sized this year's issuance, scheduled to be sold via negotiation by Sutro & Co. on June 15.
Among the three regional pool programs being planned for school districts, the largest issuance will be on behalf of 30 Orange County districts. The first-time pool program will sell via competitive bids $299.7 million of Trans on June 6.
In Los Angeles County, 27 school districts and community colleges will sell Trans via negotiation in the first half of June, while 36 San Diego County school districts plan to sell Trans via negotiation on June 14. Both financings are being handled by Sutro.
Whether joining a pool helps issuers save money compared with issuing short-term notes on a stand-alone basis continues to be a subject of debate.
"It is difficult to compare" standalone versus pooled financings, said Catherine Bando, a senior vice president for Sutro, which specializes in pooled financings.
"For large issuers with plans to issue in excess of $30 million in short-term obligations, it doesn't make sense to go into a pool," Bando said. "But, for small issuers, a pool absolutely makes sense because they get more market access."
Pooling "creates economies of scale, and it makes it easier for issuers" to participate, Khrimian of Moody's said. For example, he said, Moody's did not have to analyze each participant in the School Cash Reserve Program Authority pool because the issue is backed by an irrevocable letter of credit.
