The Massachusetts School Building Authority has scheduled an $80.2 million competitive refunding sale of senior sales tax notes for Jan. 7.
Proceeds from the Series 2015A bonds will refund two remaining maturities of the inaugural Series 2005A offering. The authority already defeased $73.1 million of the bonds two weeks ago.
The notes, scheduled to mature on Jan. 15, 2016, are secured by a dedication of 1 cent on the 6.25-cent statewide sales tax and rank equally with the authority's senior sales tax bonds.
Moody's Investors Service rates the notes MIG 1. Fitch Ratings assigned an F-1-plus rating while Standard & Poor's rated them SP-1-plus.
"The authority's strong bond ratings are based on the historical reliability of sales-tax revenue, the adequacy of debt-service coverage and the additional bonds test, and structural protections afforded, including the statutory dedication of the tax for school capital purposes," Fitch said in a rating report.
Moody's, in assigning a stable outlook, said it expects continued strong performance of the revenue stream. "Given MSBA's multi-billion dollar borrowing plan, we expect the authority to leverage the program close to the additional bonds test," said Moody's.
Standard & Poor's cited the establishment of the School Modernization and Reconstruction Trust Fund, or SMART, fund school building assistance mechanism, as a credit strength. The commonwealth cannot commingle this with other funds.
Another plus, said S&P, is that bondholders are express beneficiaries.
The state legislature created the authority in 2004 to remedy a wayward school funding system. Over its 10 years, the authority has made more than $11 billion in reimbursements to cities, towns, and regional school districts for school construction projects.
Mintz Levin Cohn Ferris Glovsky and Popeo PC is bond counsel for the sale. Greenberg Traurig is disclosure counsel.
