Louisiana is working on more than $3.5 billion in bond deals as the state grapples with what is arguably the worst outbreak of novel coronavirus in the Southeast region.
The State Bond Commission gave preliminary approval Tuesday during a virtual meeting for up to $1.3 billion of general obligation refunding bonds that will be issued in one or more series as taxable and/or tax-exempt debt. Raymond James will be the senior underwriter.
Final approval of the deal is expected to be given at the SBC's meeting scheduled for April 16.
Although COVID-19 outbreak has been severe in Louisiana, the only discussion about it Tuesday was when a commission member asked financial advisor Renee Boicourt what affect the pandemic has had on other states' bond sales.
"The municipal market has been subject to very, very severe disruption as investors fled for safety and moved their money for cash," Boicourt, a managing director with Lamont Financial Services Corp., said by phone.
The volatility affected all sectors, freezing the market for about two weeks last month, she said, adding that conditions began to thaw within the last two weeks but interest rates remain high.
The recent approval of the $2 trillion federal CARES Act is "very encouraging" because of the amount of money it set aside for states, although it's not expected to be enough to meet all needs, Boicourt said.
She also warned the SBC that there will be "quite a bit of action to come" from rating agencies in the hard hit transportation sector and debt with narrow pledges. Analysts will also be reviewing state and local governments in coming months.
The SBC Tuesday also gave final approval to the issuance of up to $1.6 billion of fixed-rate, first and second-lien gasoline and fuels tax bonds. JPMorgan will be the senior underwriter. The sale date has yet to be determined and the bonds may be privately placed.
Some $424.4 million of variable rate, second-lien gas and fuels tax refunding bonds also were approved, with Wells Fargo as the senior underwriter. The SBC also expects to extend by up to a year the May 1 mandatory tender date on $200 million second-lien gas and fuels tax bonds.
On Thursday, Louisiana overtook Florida as the state in the Southeast region reporting the highest number of COVID-19 cases.
By mid-day, the Pelican State had 9,150 positive cases of the highly contagious virus in 61 of 64 parishes and 310 people had died, according to the Louisiana Department of Health. Of 1,639 people hospitalized, 507 patients are on ventilators.
Because of the rapid rise in cases, Gov. John Bel Edwards issued a statewide stay-at-home order on March 23. At that time, the number of confirmed cases were more than 800 and were found in half of the state's parishes.
"The situation remains concerning, but every Louisianan has the power to change the path we are on,” Edwards said Thursday after DOH reported a spike in cases. “Think of your neighbors, and please stay at home.”
Florida reported 8010 positive cases by mid-day Thursday, and 128 deaths.
