Bank of America Corp. won a Texas city’s bond deal on Wednesday, a sign that the nation’s largest municipal underwriter plans to revive its public-finance business in the state after an absence of almost two years.
(Bloomberg) — Bank of America Corp. won a Texas city’s bond deal on Wednesday, a sign that the nation’s largest municipal underwriter plans to revive its public-finance business in the state after an absence of almost two years.
The bank won a $161 million offering in a competitive auction by the city of Frisco, its first time to handle a deal for a Texas city or local government since a GOP-backed law related to the firearms industry took effect in September 2021, data compiled by Bloomberg show. The bank suspended its work in the state late that year after the enactment of the law, which restricted Texas governments’ work with companies that “discriminate” against firearm entities.
Bank of America doesn’t lend to companies that make assault-style guns used for non-military purposes. The bank’s law firm sent a letter to the Texas Attorney General’s Office in May saying that the bank believes it complies with the 2021 measure and that it intends to resume working with public clients in Texas.
It’s unclear whether Bank of America has gotten a nod from the Attorney General’s Office, which oversees bond sales in the state. Austin Kinghorn, Texas associate deputy attorney general for legal counsel, sent the bank’s law firm dozens of questions about its gun industry policies in a June 26 letter.
Lowest Rate
Erin Mynatt, a spokesperson for Frisco, said in an emailed statement that the city received seven bids from banks on the sale. Bank of America offered a true interest cost of 3.52%, whereas the next-closest bidder, JPMorgan Chase & Co., offered a true interest cost of 3.57%, according to the city. Bank of America provided a deposit, so if it can’t close on the bonds the city can keep the money, according to Mynatt’s statement.
“We are aware that BoA has follow-up questions with the state attorney general to address concerns,” Frisco’s statement said. “We plan to close the sale quickly and do have their good faith check, but we are not concerned.”
A spokesperson for Bank of America said the company didn’t have an immediate comment. The Texas Attorney General’s Office didn’t respond to an email and phone call requesting comment.
In May, the bank underwrote an offering by a Texas municipal utility district, which provide utility services.
A law firm representing Bank of America previously said in a letter to the attorney general’s office that the bank can provide written verifications that it complies with the law.
“BoA serves companies and associations involved with the firearms industry,” the letter said. “BoA’s risk-based framework does not discriminate against, or prevent BoA from doing business with, any firearm entity or firearm trade association ‘based solely on its status as a firearm entity or firearm trade association’ without a traditional business purpose.”
Related: BofA’s Return to Texas Muni Market Stalled by More Gun Questions
(Adds city’s comment in fifth, sixth paragraphs, details on prior Texas debt sale in eighth.)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.