Brazos extends dates for $6B auction-rate tender

Brazos Group, the largest nonprofit borrower in the auction-rate market, has given holders of about $6 billion in student loan-backed securities more time to consent to a deal that would restructure the frozen debt.
A unit of Waco, Texas-based Brazos said the Leon Higher Education Authority, for which Brazos services loans, extended until 5 p.m. New York time on Oct. 31 the consent date for 13 tender offers announced last month, according to a press release last week. The offers, which would pay investors back at less than face value, will now expire Dec. 4.
The extension will give institutional holders of the student-loan, auction-rate securities more time to evaluate their options in light of recent market events, said Danielle Romero-Apsilos, a spokeswoman at Citigroup Inc. in New York. Citigroup is managing the offering.
The pending deal represents one of the largest efforts to restructure student-loan debt from the auction-rate market, which collapsed in February after investor demand dried up and securities dealers curbed their role as buyers of last resort.
Brazos’ proposed transaction represents one way that Citigroup is using its “best efforts to provide liquidity” for institutional investors affected by the auction-rate collapse, Romero-Apsilos said.
Citigroup’s settlement in August with regulators, including New York Attorney General Andrew Cuomo, called for the bank to help institutions unfreeze their holdings. Citigroup also was required to buy back $7.5 billion of the debt from individuals, charities and small businesses.
Brazos seeks tenders from bondholders of at least 95 percent of the existing senior notes and at least 99 percent of subordinate securities, as outlined in 13 different offers, in order to refinance the debt as term asset-backed securities.
Holders of senior debt would get 92 cents to 94 cents on the dollar plus accrued interest. &#8226