N.O. sells bonds for recovery work
Published 10:51 pm Tuesday, October 30, 2007
NEW ORLEANS (AP) — The city on Tuesday sold $75 million in bonds seen as a key funding piece in New Orleans’ hurricane recovery plan.
Standard & Poor’s gave the city a bond rating of below investment-grade status. Two other companies, Moody’s and Fitch Ratings, each gave the city investment grade ratings.
Merrill Lynch & Co., one of three firms to participate in the sale, had the winning bid, which basically means it offered the lowest amount of interest payable on the borrowing. Peter Kessenich, a financial adviser to the Board of Liquidation, City Debt, which held the sale, considered the sale a good showing, considering the Standard & Poor’s rating. He expected the money to be available to the city by mid-December.
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Mayor Ray Nagin, a member of the board, hailed it as another step in the city’s recovery from Katrina.
‘‘I truly believe we’re at a tipping point,’’ and the rest of the country is starting to see that, Nagin said. ‘‘We rise. We rise.’’
The $75 million is the first drawdown of $260 million in bonds approved by voters in November 2004 — nine months before Hurricane Katrina — for infrastructure projects.
The parameters for using the funds are vague.
For example, $162.9 million is earmarked in one voter-backed proposition to fix ‘‘major and minor’’ streets, while about $89 million is set aside for such projects as building and improving public buildings, parks and recreational facilities.
Nagin’s administration intends to use the funds as part of its targeted rebuilding plan and has proposed spending the initial drawdown on work ranging from roads, playgrounds and bleachers to police headquarters, a criminal court building and a performing arts theater.
Factoring into the investment grade rating was the projection that the city expects to be self-sufficient — not needing to rely on loans to balance its post-Hurricane Katrina budget — by 2011, information provided by the board showed.
On Tuesday, the board also approved a water-rate hike that the Sewerage & Water Board has characterized as vital to ensuring a clean, reliable flow of water in the city. S&WB’s water lines were old, leaky and in need of improvements long before Hurricane Katrina made matters worse. The increase is expected to raise about $1.8 million yet this year.