Recovery Bond Sales Picked as ‘Deal of the Year’
Two recovery bond deals sold by bankrupt Orange County last year were named “Deal of the Year,” by Institutional Investor, a financial magazine.
Considered the Academy Awards of Wall Street, “Deal of the Year” acknowledgments are given to major financings in various categories, including corporate and public finance.
“There’s no question--if there was one deal everyone watched this year it was Orange County,” said Fran Hawthorne, staff editor at Institutional Investor. “It was one of the most significant events in municipal bond history.”
Despite extraordinary resistance from an angry Wall Street last June, Orange County was able to complete two major borrowings.
In the first financing ever by a bankrupt county, Orange County sold $278 million of its so-called recovery bonds on June 13, but paid millions more in added costs.
And although it was expensive for the county to sell those bonds, it was a cakewalk compared to June 27, when the county failed to find any buyers for its $155 million so-called Teeter bond deal, even at bargain basement prices. Instead, the firms responsible for making sure the bonds were sold were forced to buy the bonds and peddle them again later.
The “Deal of the Year” recognizes “the unbroken chain of achievement the county has been able to perform in the past year,” said Christopher Varelas, a banker with Salomon Bros., the county’s financial advisor.
The two bond deals were just some of the “minor miracles” the county achieved last year to put it on the road to recovery in 1996, Varelas said.
Goldman, Sachs & Co. and A.G. Edwards & Sons, which helped sell the bond deals for the county, were both acknowledged by Institutional Investor.
The magazine gives annual awards to deals in the categories of corporate finance, mergers and acquisitions, public finance, real estate, project finance, international and derivatives.
The awards are often touted in the annual reports of brokerage firms.