BRADENTON, Fla. — With little supply in the market and investors seeking high-grade bonds, Wake County, N.C., hopes to fill some of those needs.
Wake plans to sell $345 million of triple-A rated general obligation bonds in a competitive sale Tuesday. Bids will be received until 11 a.m. via Parity.
The county's full faith, credit, and unlimited taxing power secures the debt.
Most of the proceeds will finance the Wake County Public School System's building program. About $11 million of bonds will fund library projects.
The deal is structured with serial maturities of $18.17 million in each year from 2016 to 2034.
Bonds maturing on and after Sept. 1, 2025 are subject to redemption.
Tuesday's offering is the largest new-money deal ever brought by the county, and its size is a reflection of capital needs, the improving economy, and market conditions, said Wake finance director Susan McCullen.
"We typically divide up [our transactions] a little more than this but knew the school needed it and interest rates are good," she said.
The county structured the transaction assuming it would attain a true interest cost of 3.5%, said McCullen. "I think we'll beat that by quite a bit."
Ahead of the deal, Moody's Investors Service, Fitch Ratings and Standard & Poor's affirmed their triple-A ratings. All assign stable outlooks.
The county had $1.8 billion of outstanding GO bonds as of June 30, 2013. Ratings of Aa1 by Moody's, and AA-plus by Fitch and S&P, were also confirmed on $285.2 million of outstanding limited obligation bonds.
Analysts described Wake County as well managed with conservative and comprehensive fiscal planning practices, and financially strong with healthy reserves and liquidity.
The county's economy is bolstered by one of the fastest-growing metropolitan areas in the nation driven by the region's universities and research and technology firms that provide employment for a well-educated workforce, wrote Fitch analyst Patricia McGuigan.
Wake maintains "very strong" reserves and liquidity, according to S&P analyst Lindsay Wilhelm.
"At fiscal 2013 year-end, we estimate available reserves — including committed working capital funds, a portion of the stabilization by state statute reserve, and assigned debt service reserves — at a very strong 35% of adjusted general fund expenditures," said Wilhelm.
"We expect the county to maintain available reserves at or near these levels based on its financial policy of maintaining total general fund and debt service fund balance at 30% of combined revenue," she wrote.
Tuesday's offering represents the first tranche of $810 million in GO bonds approved by voters in North Carolina's second-most populous county last October.
The bonds are the major funding piece for a $939.9 million capital program for the nation's 16th-largest public school system.
Some $129.9 million for the program will come from cash.
Waters and Co. is the county's financial advisor. Womble Carlyle Sandridge & Rice LLP is bond counsel.
Wake County plans to issue $58 million of GOs in fiscal 2015, $398.63 million in 2016, and $148.58 million in 2017, according to the preliminary official statement.
