Florida charter school defaults

Florida Charter School Destin High School defaulted on $20.4 million of bonds at the start of the month, the bond trustee reported earlier this week.

Affected were Okaloosa County, Florida, educational facilities revenue bonds (Destin High School Project) series 2021A, 2022A and 2022B.

The school failed to make interest payments of $138,450 for the series 2021A bonds and $162,275 for the series 2022 bonds.

The bonds were not rated. The series 2021 official statement said investment in the bonds "involves a high degree of risk and is speculative in nature." The series 2021A and 2022A were priced at par to yield 6% and the series 2022B were priced at par to yield 8%.

The high school is on the Gulf Coast about 60 miles east of Alabama.

The Series 2021A matures in 2050, the series 2022A matures in 2052 and the Series 2022B matures in 2027. The series 2022B is taxable and the other two are tax-exempt.

Destin High School didn't immediately offer a comment.

Municipal Market Analytics' Default Trends, which President and Partner Matt Fabian and Chief Credit Officer and Managing Director Lisa Washburn compile, reported the default Thursday.

The charter school sector and the industrial development bonds are the sectors with the most first-time payment defaults (7) so far this year, Default Trends reported.

The series 2022A traded around 63 cents on the dollar in mid-August in a $190,000 trade, according to the Municipal Securities Rulemaking Board's EMMA website. It had traded between 95 and 100 cents on the dollar as recently as early 2024.

All three series had debt service reserves but it was unclear whether bondholders were paid from this fund. The bond trustee, UMB Bank, N.A., didn't immediately respond to a request for comment.

A phone call for holders of the bonds is scheduled for 11 a.m. Eastern Friday, Sept. 26.

North Carolina charter school Bonnie Cone Classical Academy breached bond covenants this summer.