A $500 Million Deal Brings Securitization to Muni Market (1)

Rosemawr Management, an investment firm that focuses on riskier state and local government bonds, is repackaging a $500 million pool of unrated debt backed by charter schools into new securities, marking a rare effort to bring the practice to one of the bond market’s safest havens.

The firm is bundling bonds from 26 charter schools in 11 states and reselling them as new debt through a Wisconsin agency, the Public Finance Authority.

The sale borrows a technique frequently used in other corners of Wall Street, where banks routinely bundle and resell pools of lower-rated debt to insulate investors ...