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Article: Low interest rates push Sonoma County, Calif., to market federally taxable pension bonds. (Deal in the Spotlight)
- Article from:
- The Bond Buyer
- Article date:
- October 19, 1993
- Author:
CopyrightCOPYRIGHT 1993 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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LOS ANGELES - Sonoma County, Calif., plans a $97.5 million pension obligation bond sale this week on a federally taxable basis amid signs that many other issuers are preparing similar deals.
Such financings -- which can help issuers extinguish their unfunded pension liability -- are getting a serious look because of a window of opportunity provided by low interest rates
Sonoma County hopes to save money by prepaying its pension obligation, on which it now pays an 8.25% assumed interest rate, and replacing it with bonds carrying a lower interest rate.
Arbitrage rules imposed by the federal Tax Reform Act of 1986 essentially prohibited such ...