Friday, 24 April 2015 16:42
The Keystone cops running LSU bond deals?
 

KEYSTONE-COPSIf you think somehow the keystone cops are calling the shots with some investors of LSU bonds, you just might be correct.

Despite Louisiana Governor Bobby Jindal’s statements to the national media that life in Louisiana due to his stewardship has never been better, it’s far from. 

 

Arguably, at least for state government with a $1.6B budget defict, a hole as deep as one can see and government financing has never been worse.

Today is a strong example as to what can happen when money is short and tempers are also.

But, first, let’s go back a couple of days when the LSU President announced after a bad Moody’s projection, that the University was moving towards an academic bankruptcy.

After that action, some bloggers blasted the President for hurting the LSU brand, that is, opening declaring that LSU was on lean side of the road, going into bankruptcy.  One publication called upon the beheading of the President--as in firing.

Today, Treasurer Kennedy, who has been warning the voters that the state was entering into very turbulent waters notified the public that investors backed out of an LSU bond deal.   

From the facts as reported by BondBuyer, it appears that some investors pulled out of the deal because they were not notified that the state was in exigent circumstance and were upset that the bonds were put out on the market without a accurate warning.  As a result, LSU, days later, pulled the entire deal until financial conditions became stabilized.

From Bondbuyer:

Louisiana State Universityon Fridaypulled a $114.5 million bond offering that had already priced two days earlier after investors withdrew from the deal when concerns emerged over the institution's financial status.

LSU said it postponed the deal that had already been trading because of what it called inaccurate media reports about whether the state's flagship university was in the process of filing a financial exigency plan. Such a filing means that a university's funds are insufficient to support its programs or personnel, and action would be required to reduce its budget.

In a statement, LSU said it is exploring "a wide range of contingency plans," because the state of Louisiana faces a $1.6 billion deficit.

"In light of recent events, LSU has decided to postpone the issuance of Series 2015 Auxiliary Revenue and Refunding Bonds in the amount of $114.5 million," the statement said. "Under the current circumstances and due to the continued unpredictably of our state budget, we believe this is the responsible thing to do, and we will reevaluate the offering once the state's financial picture becomes clearer."

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