North Carolina starts ball rolling for $704M school debt

North Carolina's Local Government Commission took a step that could lead to $704 million school bonds over the next three and a half years.

The commission approved Wake County selling $704 million bond anticipation notes to Truist Commercial Equity, Inc. at a SIFMA plus 0.38 percentage point spread, with the rate rising to 18% if they're not refinanced by April 2030.

"The county currently anticipates taking the BANs out in annual issuance of varying amounts starting in spring 2026 through spring 2029," said David Cheatwood, managing director of First Tryon Advisors, which is the county's municipal advisor.

The BANs will mature in April 2030, Cheatwood said. If the county does not refinance them by then, they would convert to an extended term of five years with semi-annual payments of principal. The county will just pay interest on the notes until 2030.

Womble Bond Dickinson (US) LLP is bond counsel on the deal and Parker Poe Adams & Bernstein LLP is purchaser's counsel.

Wake County plans to use the proceeds with $130 million in cash to complete the projects: build a Morrisville High School, rebuild Brentwood Elementary School and perform major renovations at North Garner Middle School. The county is trying to increase its schools' capacity as the number of students in its public school system increases, the commission said.

Debt service for the BANs will be paid from the county general fund.