The City of Atlantic City, N.J., attracted a contingent of hedge fund investors to its latest bond offering as it works to restructure its obligations and operations in an effort to avoid filing for bankruptcy, The Deal reported on Friday. Atlantic City's revenue and finance director, Michael Stinson, said on Friday that the city has completed a $40.56 million bond offering through a negotiated sale with six or seven investors, including some hedge funds that he declined to name. The city sold taxable general obligation term bonds, one set of which matures in 2028 and has a 7 percent coupon, and another which matures in 2040 and has a 7.5 percent coupon. The bonds are priced at a discount to yield higher than their coupon amount. According to Stinson, the 2040 bonds will yield 7.75 percent. The bonds were issued under New Jersey's Municipal Qualified Bond Act, a program that provides additional security for investors since the money for bond payments comes from the state and will never enter Atlantic City's general fund. New Jersey's treasurer will set aside a portion of state aid that was allotted for the city and give it directly to the paying agent for the bonds.
