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County pauses $5.5M bond sale after raters flag bank-loan acceleration clause; amendment pursued
Summary
Finance staff paused a planned $5.5 million promissory-note sale after bond raters flagged a standard local-bank acceleration clause; staff negotiated a 180-day amendment with local lenders to reduce rating risk and expects to proceed with a ratings call and sale if agreements are completed. Board approval will still be required to finalize the sale.
County finance staff told the committee they had paused a planned sale of a $5.5 million general-obligation promissory note after bond raters raised concerns about an acceleration clause in the county's local-bank loans that could require full payment on default. Staff and outside counsel arranged meetings with local bankers and sought amendments that would provide the county 180 days before acceleration would be triggered.
"We were all set to move forward with this... the raters looked at that as a pretty big risk for them," finance staff said. Staff reported that the 180-day amendment materially reduced rater concerns and that they expect a ratings call and to put the bonds out for sale as soon as the lenders execute the amendment; the board will still have to approve the sale after bids are received. Committee members asked about potential rating levels (historical ratings discussed) and the timing for board consideration.
