Stockton (Calif.) Schools Test Muni Market After City Bankruptcy

Friday, October 12, 2012

The public school district that serves Stockton, California, which became the biggest U.S. city to enter bankruptcy in June, plans to issue $45 million in debt as soon as next week in its first sale since the municipality sought Chapter 9 protection.

The separately financed Stockton Unified School District, which runs elementary and high schools as well as charter facilities, will issue general-obligation bonds maturing from 2013 to 2027 to refund higher-cost debt, according to data compiled by Bloomberg. It’s selling as the yield penalty on its previously issued debt has declined.

The deal will be the first by an issuer with “Stockton” in its name since June 28, when the city of 292,000 sought protection from creditors. An agricultural center about 80 miles (130 kilometers) east of San Francisco, Stockton aims to force investors to take a loss, according to analysts and court records.

The name association “is one of the largest challenges we have as a district,” Wayne Martin, the school system’s chief business official, said in a telephone interview.

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