Los Angeles Unified School District’s USD 1.2bn Hits Market With Beefed-Up Security

March 1, 2016 – In The News
Debt Wire

Michael A. Sweet was featured in the Debt Wire article, “Los Angeles Unified School District’s USD 1.2bn Hits Market With Beefed-Up Security.” Full text can be found in the March 1, 2016, issue, but a synopsis is below.

The Los Angeles Unified School District, which is the second largest public school district in the country, has recently priced USD 1.2bn in tax-exempt general obligation bonds. The issuance will likely provide bondholders with added security in bankruptcy due to the bonds not being fully priced in the new language in offering documents.

California’s Senate Bill 222, which “provides bondholders with a statutory lien on tax revenues that back general obligation bonds,” offers extensive disclosure for bond offering documents and became effective January 1, 2016.

The legislation hasn’t been tested yet, noted Fox Rothschild’s Michael Sweet. While the drafters of SB 222 tried to come up with airtight language, it will be awhile before bondholders know for sure how effective it is, he said.