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The Bond Buyer

Surge in Oregon schools' deferred interest bonds sets off alarms

A spike in Oregon school districts’ reliance on capital appreciation bonds to fund expansion is stirring a debate among debt analysts.

Since early 2017, Oregon school districts have floated the greatest par value of tax-exempt CABs at almost 50% of the $1.1 billion total in primary market issuance for schools, according to an April 2 report from Municipal Market Analytics.

Speculative borrowing structures such as CABs can strain credit quality if property value growth assumptions do not materialize, wrote Lisa Washburn, an MMA managing director and the report’s author.

Tim Holler