Connecticut’s Mohegans bond sale flounders as junk supply grows

NEW YORK – Connecticut’s Mohegan Tribe, which own the Mohegan Sun casino, hasn’t been able to complete a $53 million bond sale as competition for investors in the high-yield municipal debt market increases.

While five-year maturities of the unrated bonds drew strong demand Wednesday, debt maturing in 2030 priced to yield 6.25 percent couldn’t all be sold, said Matt Dalton, CEO of Rye Brook, N.Y.-based Belle Haven Investments, who placed an order for the short-term debt.

“High-yield has kind of come off here a little bit. Cash flow hasn’t been robust,” said Dalton. “There’s the feeling of a lot of supply of high-yield in the air and not a lot of money chasing it.”

Puerto Rico’s main water utility plans to sell $750 million of revenue bonds as soon as next week, the first offering from the financially struggling Caribbean island since it defaulted on debt sold by one of its agencies last week. Detroit, which filed for bankruptcy in 2013, plans to sell $245 million of bonds backed by income taxes and a limited-tax general obligation pledge. The city is issuing the bonds through the Michigan Finance Authority’s local government loan program. Standard & Poor’s gives the bonds an A rating.

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The 2,000-member tribe is refinancing tax-exempt debt issued in 2001 for infrastructure improvements on its 544-acre reservation in southeast Connecticut about 125 miles north of New York City. The deal comes five months after the Mohegans and a tribal authority issued about $120 million of municipal bonds to help finance a new 400-room hotel.

“We are still monitoring the market as the refunding is day-to-day,” Janine Epright, the tribe’s chief financial officer, said Thursday in an email. The tribe will complete the refunding “once it meets the tribe’s savings objectives.”

Brad Winges, head of fixed income at Piper Jaffray Cos., the firm managing the Mohegans’ sale, couldn’t immediately be reached for comment.

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