Unfreaking believable. For a 105mil bond to turn into 981mil would require an interest rate over 10% on a gov bond. No wonder there is a no-refinance clause in the bond. The bond issuers got the city by the gills and doesn’t want to let go. The City of Poway should look into whether there was any conflict of interest on any of the advising parties.
One thing I mention to a friend is that if a loan has a pre-payment penalty, then you didn’t get the best deal possible. This is for a simple reason. The entity loaning the money will be looking at alternate options for the use of the money. If the entity loaning the money finds that the return from loaning to ‘you’ is the same as anyone else, then prepayment is not an issue because the entity will just loan it back out to someone else at the same effective rate if it is pre-payed. On the other hand, if the entity finds that they are able to extract a premium in excess of the risk involved, they will want to ‘lock’ that premium in because they could not redeploy the capital somewhere else and get the same profit.
