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Article: Los Angeles school district buys cap to keep lid on interest rates.(Los Angeles, California, Unified School District)
- Article from:
- The Bond Buyer
- Article date:
- February 23, 1998
- Author:
CopyrightCOPYRIGHT 1998 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 Unified School District officials were nervous that their first variable-rate borrowing could blow up in their faces with a sudden rate increase, so they purchased an interest-rate cap to eliminate that risk.
"It's just another precautionary measure that custodians of public funds need to be aware of," district chief financial officer Henry Jones said. "Anything could happen with interest rates. ... This provides protection at a very minimal cost."
For the next two years, the interest rates on $91.4 million of certificates of participation the district sold in December will stay below 6.00%. If they rise above that level, Bankers Trust Co. will ...