- Investors believe university ‘has no legal basis’ to call debt
- Deal is part of a wave of planned refundings using ERP call
A group of investors is challenging a $1 billion municipal bond refunding by the Regents of the University of California.
The bondholders said there’s “no legal basis” to allow the refinancing, according to a copy of a letter seen by Bloomberg News and people with knowledge of the matter. The debt was priced on Tuesday.
The deal is part of a wave of planned refundings that would replace taxable debt sold under the Build America Bonds program more than a decade ago with lower-yielding, tax-exempt securities. Some investors are questioning their legality, which hinges on a provision in the bond documents that allows state and local governments to buy back their debt before it comes due if an extraordinary event occurs.
Bloomberg Markets
By Nic Querolo and Amanda Albright
March 6, 2024