Denver Public Schools has quietly put the rest of its controversial variable-rate bonds with swaps on the market to sell as fixed-rate debt.
The district also is putting a separate $58.2 million COPs issue on the market, set to price the week of April 22, to fund the construction of two schools, as well as street and athletic field improvements at a high school within the Stapleton redevelopment area, according to Fitch.
Fitch rated both of the bond issues AA.
DPS “fixed out” — or issued debt at a fixed interest rate — half of the original $750 million in debt in 2011, and paid nearly $42 million in swap termination fees to New York-based JPMorgan to do so.
After the termination fees were added, the 2011 refinance came to $792 million, with $396 million in fixed-rate debt and $396 million in variable-rate debt.
Based on the fact that the district is issuing nearly $520 million in COPs this month to fix out the remaining $396 million debt, it would indicate that DPS is paying about $124 million in swap termination fees.
The district didn’t issue a press release about the bonds.
When asked if the district had discussed fixing out the remaining debt publicly, DPS spokesman Michael Vaughn responded Friday in an email: “No board action was required. The existing parameters resolution the board approved already provided the authority to fix out the COPs. The financing was talked about at February Finance & Audit [committee meeting], March F&A, the March 18 work session and the March 21 regular meeting. It’s clearly listed on the agenda of all of those public meetings on our BoardDocs website, with the pertinent documentation. I think that qualifies as thorough public notice and discussion.”
However, the only discussion of the COPs at the March 21 school board meeting was when Superintendent Tom Boasberg said: “I do understand there is a board consensus pursuant to the parameters resolution passed last year. So with that we are moving to take the variable rates and move to fix those it and do so judiciously, and we’ll have an update for the board.”
At that point, board member Jeannie Kaplan asked: “We’ll get an update at our next meeting?”
Heather Draper covers banking, finance, law and the economy for the Denver Business Journal and writes for the “Finance Etc.” blog. Phone: 303-803-9230.
Copyright 2013 Denver Business Journal. This article is reprinted with permission.