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. (BAC:US) and Duke Energy Corp. (DUK:US), 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.
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