BAB investors bring on law firm to challenge University of California refunding

Build America Bond holders turned up the heat Wednesday on the Regents of the University of California's $1.1 billion refunding, bringing on a high-profile law firm to tell the university it must either pay BAB holders more for the make-whole premium, cancel the deal or face a lawsuit for breach of contract. It's the latest salvo in what is expected to become a wider legal battle between issuers who hope to refund the taxable BABs into lower-cost tax-exempt debt by taking advantage of the so-called extraordinary redemption provision and investors who hold the pricey paper. The extraordinary redemptions being used to call Build America Bonds "are based on a creative but flawed legal argument driven by the current change in interest rates," said Kramer Levin partner Amy Caton.

Registration is open for The Bond Buyer Texas Public Finance conference next month in Austin.

With the high-yield municipal bond market riding a tide of inflows and new deals in 2024, investors say Citigroup's December exit from the space appears manageable so far, but that the true test will come when flows reverse and the market has to go without its longtime go-to liquidity provider.

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Utah Gov. Spencer Cox said Thursday he will sign a bill that has been flagged by the Intermountain Power Agency as posing risks to its bond-financed transition from coal to cleaner fuels. The bill aims to keep the coal-fired power plant near Delta, Utah, in operation beyond its July 1, 2025, shutdown deadline. The bill puts $2 billion of outstanding bonds at risk, IPA Board Chair Nick Tatton has said.

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The IRS has finalized the rules for monetizing clean energy tax credits, which frees up non-profit power entities to issue more debt that can be used to finance electrical infrastructure projects.

Read the newest research from The Bond Buyer detailing the public finance industry’s views of the risks and opportunities in 2024.

Initial funding for a $2.55 billion bond-financed terminal project at Houston’s George Bush Intercontinental Airport is moving forward after months of delays. The city council appropriated $150 million, the first portion of the city’s share of the project that will be financed with up to $624 million of general airport revenue bonds.

Long-term municipal bond sales dropped for the second straight year in 2023, but a late year surge of issuance raised hopes for a rebound. Learn more in The Bond Buyer’s annual review of municipal bond market statistics.

Municipals saw spots of weakness on the short end of the curve Thursday while two high-grade issuers priced the largest deals left of the week and mutual funds saw smaller inflows. LSEG Lipper reported fund inflows of $63.8 million for the week ending Wednesday following $300.5 million of inflows the prior week.

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