Ron DeSantis' war on Disney has bondholders panicked over who's responsible for $1 billion in debt: report
Gov. Ron DeSantis (Photo via Saul Loeb for AFP)

The Wall Street Journal is reporting that a decision by the Republican-led legislature in Floria -- at the behest of Gov. Ron DeSantis -- to strip the Disney Company of its special taxing privileges has bondholders in a frenzy over who will be responsible for approximately $1 billion in debt payments.

The Disney bill, signed by the governor in retaliation after the media titan criticized his so-called "Don't say gay" bill, leaves the future of the special taxing district known as Reedy Creek up in the air -- and that has anxious investors asking questions.

Withn the report stating, "Florida law dictates the bondholders must be paid," the Journal's Heather Giller wrote, "Those caught up in the fight include municipal bond investors, firefighters, and the $210 billion global media and marketing enterprise behind Star Wars, the Avengers and ESPN."

With investors asking, who will be held accountable for repaying nearly $1 billion in municipal debt used to build the infrastructure surrounding the massive Disney World theme park, the Journal is reporting, "One of the bill’s sponsors is now considering re-establishing a watered-down version of Reedy Creek to unwind the legal mess. "

According to the report, Reedy Creek bonds are plunging in value over repayment concerns.

"Reedy Creek bonds maturing in 2028 traded at 87.5 cents on the dollar Thursday and Friday, down from about 100 cents in January, according to Municipal Securities Rulemaking Board data. Two major ratings firms have flagged the bonds for potential downgrade, saying it isn’t exactly clear who owes investors their money," the Journal's Giller explained.

According to Michael Rinaldi, head of U.S. local government ratings at Fitch Ratings, "It’s mere speculation at this point. We don’t have any information.”

With a DeSantis spokesperson is trying to calm the financial community, claiming the governor has a plan, Florida State Rep. Randy Fine (R) who co-sponsored the bill, suggested what may come to pass.

According to the Journal, Fine claimed "... a court or additional legislation could help determine how to divide the debt up among local governments," adding "...another option would be for lawmakers to re-establish a less-powerful version of the Reedy Creek Improvement District for the purpose of servicing the debt."

The Journal report added, "Mr. DeSantis’s office said in a statement when he signed the Reedy Creek bill that he didn’t expect it to increase residents’ taxes. The impact to local governments could extend well beyond having to take over debt payments, however."

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