CHICAGO - Wisconsin plans three bond sales this month beginning Thursday with a $90 million new-money general obligation issue followed by a $128 million clean water revenue refunding issue next week.
The state will close out the month with a $40 million certificates of participation sale.
The GOs mature between 2017 and 2021.
The competitive sale is a followup to a larger issue on the longer end earlier this year. The state had carved out the early maturities for a later sale as it eyed an expansion of its extendible municipal commercial paper program or the use of a new variable-rate product/platform.
The state wasn't ready to move on either product but, in need of the proceeds to fund projects, opted to go with a traditional fixed-rate issue.
"We are looking forward to strong interest because this is smaller than our usual $300 million or $400 million transactions so there is an opportunity for smaller firms to submit bids independently" instead of joining a syndicate, said David Erdman, assistant capital finance director.
Foley & Lardner LLP is bond counsel. Proceeds will finance "bricks and mortar" projects approved by the state's building commission.
The clean water refunding is slated for June 18. Erdman said if the Federal Open Market Committee's meeting disrupts the market the state can alter the sale date on the negotiated transaction being led by Citi.
Sycamore Advisors is advising the state and Foley is bond counsel. The mix of current and advance refunding bonds is expected to generate at least 7% in net present value savings.
A third transaction is planned before the end of the month for $40 million of COPs under the state's mater lease program for equipment purchases. Robert W. Baird & Co. is leading the deal, Erdman said.
Rating agencies have not yet issued reviews on the clean water financing but the existing bonds carry ratings in the double-A category.
Ahead of the GO sale, Fitch Ratings and Standard & Poor's affirmed the state's AA rating and Moody's Investors Service affirmed its Aa2 on $8 billion of debt. Moody's assigns a positive outlook while the other two assign a stable view. Kroll Bond Rating Agency also affirmed its AA rating and stable outlook on Thursday.
The rating "reflects our view of the state's governmental framework supportive of credit quality with a constitutional balanced-budget requirement and a statutory provision that gives GO debt service the first claim on state revenue," said analyst Gabriel Petek.
The rating further reflects low general fund balances and moderate to moderately high debt burden, offset by a fully funded pension system.
Moody's said its rating is supported by the state's fully funded pensions, limited other-post employment benefits' liabilities, and moderate economic growth, as well as governance constraints evidenced by limited executive authority to reduce mid-year appropriations. "The rating also acknowledges recent revenue volatility and a fund balance position that remains below average," Moody's wrote.
The capital finance office is currently being managed by Erdman after the recent resignation of capital finance director Kevin Taylor. The state has not announced its intentions on filling the post. Erdman said two new capital staff members will join the office next week -- Joe Adomakoh who will work on bond management matters and Jessica Fandrich who will work on the environmental improvement bond fund.
State lawmakers remain immersed in hashing out a final two-year roughly $68 billion budget package. Gov. Scott Walker has said he's confident a final deal will be approved ahead of the start of the next biennium July 1. Walker is then expected to formally launch his bid for the Republican nomination in the 2016 presidential contest.
Walker is a Republican and the GOP holds a legislative majority but the governor has faced a tougher road this year winning approval for his budget plan as lawmakers have tweaked his proposals related to school funding and changes at the University of Wisconsin.
Lawmakers remain divided on some spending issues and a final budget remains before the Joint Committee on Finance. One of the most contentious issues has been Walker's proposal for $1.3 billion in new transportation related borrowing. Republicans are expected to cut the size in a final deal. New GO borrowing levels also are not yet final.
It's also unclear whether a revised financing plan for a new Milwaukee Bucks basketball arena will be part of the budget. The plan unveiled last week by Walker relies on $250 million in public funding for the $500 million project including contributions from the state, Milwaukee, and Milwaukee County with borrowing planned through the Wisconsin Center District. The district would tap existing tourism related revenues that now go to repay convention center debt and possibly could leverage county and state contributions.
