La Cañada Unified halts sale of $30M bond series, citing market volatility
La Cañada Unified School District officials poised to sell $30 million of Measure LCF school bonds this week have decided to hold off, after a dizzying stock market response to the coronavirus pandemic disrupted the municipal bond market.
Assistant Supt. Mark Evans said financial consultants advised postponing the sale of a second series of Measure LCF bonds, despite the district’s record high assessed valuation and better-than-average bond rating.
“We’ve decided not to proceed at this point,” Evans said. “We’re monitoring the market, but it’s very volatile, so we’re just trying to keep a pulse.”
LCUSD Governing Board members approved during a Feb. 12 meeting moving the sale, originally scheduled for 2021, up by one year.
Adam Bauer from of Irvine-based Fieldman, Rolapp & Associates, Inc. said the move would maximize purchasing power by allowing the district to pay for projects earlier and keep rising construction costs at a minimum.
Bauer anticipated bond prices would be set for investors sometime around March 11 with the closing period anticipated for March 25. Fliers were mailed earlier this month to area residents to inform them of the investment opportunity.
But as cases of novel coronavirus continued to spread both abroad and in the United States, the World Health Organization on March 11 declared the coronavirus outbreak a global pandemic.
President Trump responded two days later, declaring on Friday a national emergency on the same day LCUSD closed school campuses in advance of a transition to distance learning as a preventive measure against the spread of the virus.
Stock market values plunged and were severe enough to cause the comparatively steady municipal bond market to falter as investors’ appetites shrank across the board.
“Usually when the stock market is volatile, everybody runs to the bond market,” Evans explained. “But the rates in the bond market keep jumping around. So, we’re trying to wait for waters to smooth.”
Evans said the district will continue to monitor the market and is receiving ongoing updates from its financial consultants.
