Charlotte Dangles AAA to Buyers After Mayor’s Arrest: Muni DealsRomy Varghese
Charlotte, North Carolina’s largest city, plans to draw bond buyers about two weeks after federal prosecutors charged its mayor with soliciting bribes.
The city, home to Bank of America Corp. and Duke Energy Corp., is selling about $130 million in AAA rated general obligations this week to refinance commercial paper, according to deal documents.
Mayor Patrick Cannon, a Democrat, resigned March 26 after prosecutors accused him of soliciting and accepting more than $48,000 in cash, airline tickets and other items. Agents in the FBI sting posed as investors and real-estate developers interested in city projects.
“While the sitting mayor’s resignation last week due to corruption charges adds a modicum of potential risk on a political level, the city’s credit fundamentals remain very strong,” Moody’s Investors Service said in a release. Charlotte has a “large, diverse and expanding tax base.”
When asked about a potential impact of the arrest on the deal, Adam Guerino, Charlotte’s debt manager, referred in an e-mail to a notice on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website, known as EMMA. The notice said the charges and resignation won’t affect about $40 million in certificates of participation sold last month.
The community of 775,000 serves as headquarters for financial companies with assets of about $2.2 trillion, according to deal documents. It has $866 million in general-obligation debt as of Jan. 31, documents show.
Debt from North Carolina issuers is earning 2.7 percent this year, lagging behind the 3.5 percent return of the $3.7 trillion municipal market, according to S&P Dow Jones Indices data through April 3.
Charlotte joins localities selling about $5.3 billion of debt this week, up from $4.5 billion last week, data compiled by Bloomberg show.