WASHINGTON -- Triple-A rated Maryland is planning to competitively sell $500 million of general obligation bonds on July 16.
Maryland will have two competitive bids: one is expected to be for $450 million of tax-exempt bonds and the other for $50 million of taxable bonds. The amounts are subject to change, according to the preliminary official statement.
The proceeds of the tax-exempt bonds will be used to finance capital projects such as educational facilities and hospitals. The taxable bond proceeds will mainly be used to support housing, community development and water-quality financing programs, according to a news release from the state treasurer's office.
The bonds are expected to be sold to institutional investors, officials from the treasurer's office said.
All three major rating agencies have reaffirmed Maryland's triple-A rating ahead of the sale. Maryland has held that rating since 1961 from Standard and Poor's, 1973 from Moody's Investors Service, and 1993 from Fitch Ratings, according to those officials.
Maryland's retention of its triple-A ratings "serves as confirmation of the state's overall fiscal strength and longstanding commitment to prudent financial management," state treasurer Nancy Kopp said. Kopp, Gov. Larry Hogan and Comptroller Peter Franchot make up the Maryland Board of Public Works, which will oversee the competitive sales in the Goldstein Treasury Building in Annapolis.
The rating agencies praised Maryland's history of strong financial management. The state is managing its finances well despite federal budget reductions, they said.
"Sound fiscal management practices and the consistent maintenance of fiscal flexibility (including budgetary reserves) are expected to provide the state with significant ability to respond to near-term economic or fiscal conditions, such as federal budget reductions, in a manner consistent with the 'AAA' rating," Fitch said.
"Although federal fiscal policy remains a challenge to the state's budget and long-term financial plan, we believe that Maryland has demonstrated strong revenue and budget monitoring practices with a track record of making expenditure adjustments midyear when required," S&P said.
Moody's noted that the state's economy is gaining momentum as the impact from federal spending cuts known as sequestration tapers off. "Consistent with its history of strong financial management, the state has been appropriately addressing its structural budget gap and pension funding concerns even under pressure from federal budget reductions," Moody's said.
The rating agencies also said that while Maryland has pension funding challenges, it has enacted reforms during the past few years.
Maryland typically has competitive GO bond sales twice a year. The state treasurer's office said it expects to have another sale in February or March.
The state had $11.65 billion of net state tax-supported debt outstanding as of March 31, according to the POS
