Posted: Oct 18, 2012 2:52 PM
Updated: Oct 18, 2012 2:52 PM
Source: Associated Press
BATON ROUGE - Louisiana will pay as much as $90 million to get out of a troubled borrowing deal that helped upgrade the Superdome after Hurricane Katrina.
The State Bond Commission gave preliminary approval Thursday to a debt refinancing for the Louisiana Stadium and Exposition District that will include the termination payment to Merrill Lynch, which handled the previous bond sale.
The proposal will restructure a 2006 bond deal that became saddled with problems as part of the credit crunch and financial downturn a few years after the deal was struck.
The bonds were originally "auction-rate" securities, which were tied to short-term interest rates reset every week. The arrangement exploded in interest costs after the market for government securities dried up, so the state bought the debt temporarily to force down interest costs.