WASHINGTON -- The District of Columbia plans to sell today a $260 million general obligation bond issue a relatively straightforward deal compared with the city's recent forays into the bond market.
The competitive deal will carry insurance from Municipal Bond Investors Assurance Corp., ensuring a triple-A rating. The district has an uninsured rating of A-minus from Fitch Investors Service and Standard & Poor's Corp., and a Baa from Moody's Investors Service.
Ellen M. O'Connor, the city's deputy mayor for finance, said current market interest rates appear favorable, adding that officials expect bids in the 5% to 6% range on the triple-A rated debt.
The bonds will mature in 20 years.
The city's last major issue came in March, when the district refunded $300 million of outstanding bonds in a complicated deal involving interest rate swaps. The variable-rate, GO bonds were sold in six pieces at par, with a 3% coupon. The district swapped the variable-rate payment on the bonds to obtain fixed-rate debt service with Merrill Lynch & Co.; Pryor, McClendon, Counts & Co.; and WR Lazard,
Last year, the district issued $230 million of series 1991B variable-rate bonds and $105.46 million of series 1991C fixed-rate bonds as part of a plan to eliminate the city's accumulated general fund deficit. The variable-rate bonds were backed by letters of credit, and interest payments were swapped with Pryor McClendon and Merrill Lynch.
Ms. O'Connor said such complex structures were unnecessary for today's deal because of the favorable interest rate environment.
