County Refinancing Ends Bankruptcy Debt 10 Years Sooner
(Santa Ana, CA) – Today the County priced the refunding of the 1995 Recovery Bonds. This is the second and final marketing phase of the refunding and restructuring of the County’s bankruptcy recovery debt.
“This is probably the most important step this County has taken in the last five years,” said Second District Supervisor Jim Silva. “We’re making a significant investment in Orange County’s future by reducing the debt that the next generation would have had to endure. This is an important day that we’ve been planning for over the last 10 years.”
The Refunding Recovery Bonds, 2005 Series A (2005 Recovery Bonds) have a par amount of $146.005 million. Serial bonds from the year 2006 through the year 2015 were sold with yields ranging from 2.621% in 2006 to 3.860% in 2015. These rates compare to the interest rates of the 1995 Recovery Bonds of 5.50% to 6.00%.
In the aggregate, the two refundings have a par value of $565.76 million. The retail sales for the two transactions total approximately $200 million of the $565.760 million total.
“The refunding and restructuring result in net present value savings of approximately $102.5 million. That’s an annual budget savings of $2.5 million,” said Silva.
“My colleagues and I directed staff to target most of the savings to the back end of the debt service schedule where there are no identified revenue sources to offset the cost of the debt service,” said Silva. “The final maturity is reduced from the year 2026 to 2017. The 2017 payment will be made from the debt service reserve fund and. thus, the impact of these two refundings on the general fund will end after the year 2016.”