The largest industrial revenue bond in U.S. history - $8 billion - has been approved by a New Mexico county for Intel Corp. to expand and revamp its Rio Rancho chip-making plant.
"This is a huge amount of money almost under any measure, but Intel is a large corporation," Parry Young, head of public finance for the Standard & Poor's rating agency in New York, said in a telephone interview Friday.The bond is essentially a way for Intel to save on taxes as it reinvests its own capital in a factory expansion in Sandoval County, located northwest of Albuquerque.
The bond will never make it into the public financial market. Instead, Intel subsidiary Syn-chro-quartz U.S. Corp. will buy the bond, in increments, over the next 10 years, and the Intel parent will get the proceeds.
Synchroquartz was set up solely to handle Intel's investments in its operations.
If Intel instead directly invested $8 billion in its plant, it would have been required to pay taxes on about 80 percent of that money. But by issuing the bond in Sandoval County's name, Intel gets $455 million in state and county tax breaks.