The Kentucky State Property and Buildings Commission has $649 million of bonds on the calendar next month in a deal that will refund all of its outstanding Build America bonds, provide new money for capital projects and include a tender offer.
Separately, the Kentucky Housing Corp. and the Kentucky Infrastructure Authority are seeking firms to provide municipal bond services.
The state Office of Financial Management will be issuing the tax-exempt revenue refunding bonds on behalf of the SPBC.
The $649 million of Project 130 bonds will be priced via negotiation on April 10, according to an offering published on the state's bond investor relations page.
As recently as February, the commission had been contemplating a sale in the range of $275 million to $860 million, according to a
According to the recent offering summary the bonds will come in three series.
The $223.26 million of Series A bonds are expected to be issued as fixed-rate tax-exempt revenue bonds. Proceeds of the new money sale will provide permanent financing for authorized general fund supported capital projects.
The $406.725 million of tax-exempt Series B revenue refunding bonds are expected to refund all of the commission's outstanding BABs including Project No. 95 Series C, Project No. 96 Series C and Project No. 99 Series C.
The commission has authorized a tender of $19.38 million of Series C bonds to refund some outstanding revenue refunding bonds, which will be included as part of next month's sale.
A preliminary official statement is not yet available.
BofA Securities is the lead manager on the deal. Baird, PNC Capital Markets, Raymond James, FHN Financial Capital Markets, Huntington Capital Markets, Stifel and Morgan Stanley are co-managers.
Kutak Rock is the bond counsel and Dinsmore and Shohl is the underwriters counsel. U.S. Bank is trustee and paying agent.
On March 6, the commission competitively sold $10.575 million of agency fund Project No. 129 revenue refunding bonds. Wells Fargo won the deal with a true interest cost of 2.7791%.
The deal was rated A1 with a positive outlook by Moody's Ratings. Moody's lifted Kentucky's outlook from stable in September, "based on the expectation the budget reserve trust fund will remain in line with higher rated peers."
Moody's said its A1 rating was one notch lower than the commonwealth's issuer rating of Aa3, "reflecting the essentiality of the financed projects as well as the moderately strong legal structure, in which the funds pledged to pay the bonds are subject to appropriation."
Moody's noted the Kentucky Finance and Administration Cabinet had covenants to seek appropriation to replenish the debt service reserve fund if needed. The refinanced debt originally funded capital projects associated with the Kentucky River Authority, which serves an essential purpose of the commonwealth, Moody's said.
"The commonwealth's sound financial position, bolstered by demonstrated fiscal discipline, improving economic growth and stable, though high, leverage and fixed costs, indicates an improving credit profile," Moody's analysts wrote.
In September, Kroll Bond Rating Agency affirmed the SPBC's long-term rating at A-plus with a stable outlook.
KBRA said the rating was affirmed because of "ongoing progress in addressing the chronic underfunding of pension obligations and strong revenue performance has led to balanced financial operations and improved reserves over the past two biennia."
Kentucky has seen record economic growth in the past few years, according to Gov. Andy Beshear's office.
Since 2019,
The state also has seen the largest general fund
Last year, Kentucky received rating upgrades from
S&P upgraded Kentucky's issuer credit rating to A-plus from A; the outlook was revised to stable from positive. Fitch upgraded Kentucky's issuer default rating to AA from AA-minus and upgraded the state's annual appropriation-backed debt and other state IDR-linked debt to AA-minus from A-plus. Fitch assigned a stable outlook to the credit.
Also in 2023, KBRA affirmed the state's general obligation bonds AA-minus with a stable outlook.
Separately, the Kentucky Housing Corp. is inviting proposals both from banks
The housing corporation also wants to hire one senior managing underwriting firm to complete financings for single-family program notes and bonds issued under the corporation's housing revenue bond indenture or under the newly created general indenture.
The firm chosen to perform bond counsel services will work with the corporation, the OFM, a quantitative analysis firm, a senior managing underwriter and trustee.
The firm picked will be responsible for duties which include setting up a notice of sale; providing legal opinions and legal advice related to debt structuring; interest rate swaps; program documentation; the sale and closing of securities; tax issues including secondary market disclosure compliance arbitrage regulation compliance; consulting with the trustee and the corporation.
Additional duties include drafting and circulating of required issuance documents for approval-including duties related to the potential creation of new indentures, remarketing agreements, liquidity agreements; reviewing the preliminary official statement and final official statement in a negotiated sale; and coordinating the closing of all issues.
Additionally, the Kentucky Infrastructure Authority is looking to hire firms
The firm chosen will work with the authority, the OFM and possibly a senior managing underwriter and a bond counsel firm.
The work may include negotiated or competitive new money transactions, bond refinancings, and other issuance-related financial transactions to include advice relating to any bond anticipation note programs, debt service and other reserve funds.
The authority must submit all proposed debt financings to the OFM for review and approval prior to issuance.
