Wisconsin will be in the market Wednesday with $253.9 million of Series 2025A general obligation bonds, with some of the proceeds funding Wisconsin's share of the John A. Blatnik Bridge replacement project.
"There is $30 million of preliminary funding included in this issuance for Wisconsin's share of the Blatnik Bridge replacement, which will be funded with federal funds with the remainder split between Wisconsin and Minnesota," Wisconsin Capital Finance Director Aaron Heintz told The Bond Buyer last week. "There is also about $39 million included for fee supported projects for the University of Wisconsin system."
The 63-year-old bridge connects Superior, Wisconsin, to Duluth, Minnesota, across the Saint Louis River. The 7,975-foot-long bridge handles about 33,000 vehicles daily. But in recent years it has had a weight limit of 40 tons because it can no longer support overweight freight loads.
In January 2024, the project
The bond counsel for the competitive sale on Wednesday is Foley & Lardner. Wisconsin does not use a municipal advisor on the GO new money sales, Heintz said, because "we can handle running any numbers on our end."
They did seek input from municipal advisory firms on call structure, he said.
Kroll Bond Rating Agency rates the bonds AAA with a stable outlook. Moody's Ratings assigns a rating of Aa1; the outlook is stable. S&P Global Ratings rates the bonds AA-plus with a stable outlook.
KBRA pointed to the strength of the GO pledge; a trend of conservative budgets, healthy financial results and improving reserves; a good liquidity position; and a strong legal framework supporting the master lease program as reasons for its rating.
Douglas Kilcommons, managing director in KBRA's public finance ratings group, said KBRA expects state operations to remain structurally balanced, with Wisconsin retaining "considerable financial flexibility to manage any forthcoming reductions in federal aid."
Moody's said it expects the state's "prudent" budgetary practices to continue, leading to solid reserves and low leverage.
"We are cognizant of how much general purpose revenue-paid debt is as a portion of GPR revenue, and this new GO bond issue isn't increasing that ratio of GPR-paid debt to GPR revenues," Heintz said.
"Federal aid makes up a substantial portion of Wisconsin's governmental revenue and thus potential cuts to federal aid could test the state's long track record of prudent budgeting practices," said Dan Kowalski, assistant vice president and analyst at Moody's.
Low pension and other post-employment benefit burdens "will remain a particular strength for the state," Moody's wrote.
"Wisconsin's low pension liability is largely due to the state's track record of consistently strong pension contributions and investment risk-sharing provisions, whereby employees can choose to seek higher benefits but must also accept greater investment risk in return," Kowalski said.
S&P credit analyst Geoff Buswick said in a statement that S&P's rating reflects an institutional framework that bolsters credit quality; economic growth and income metrics slightly trailing those of the nation; an executive branch that can make midyear budget corrections; robust revenue collections and resilient budgetary performance; and a well-funded pension system.
However, "the rating also incorporates our belief that economic cyclicality could result in fluctuations in financial performance," he added.
"The repayment is very much insulated from economic downturns or cuts in federal funding because repayment of the bonds is essentially number one in the list of priority of payments," Heintz said.
He pointed to the state's 2024 Continuing Disclosure Annual Report from Dec. 20, which stipulates that all direct and indirect payments of principal and interest on state general obligation debt have first priority and may not be prorated or reduced.
Wisconsin had $6.8 billion of GOs outstanding as of February, including fixed-rate GO bonds and variable-rate extendable municipal commercial paper notes. It has about $11 billion in net tax-supported debt.
The state closed on a $454.3 million GO refunding transaction Feb. 27 that generated $30.2 million of present value savings.
Heintz said Wisconsin "will look to refresh our GO refunding authority in May," but the new money proceeds from these GO bonds "should last until the end of September."
On the transportation revenue bond credit, Wisconsin recently released a POS for a refunding transaction that includes a tender component and current refunding of bonds with a July 1, 2025, call date.
On the Environmental Improvement Fund revenue credit, Heintz noted Wisconsin is scheduled to close Thursday on a $28.6 million refunding issue that generated $1.5 million of present value savings.
"We don't currently anticipate any new money needs for the next 6 months [for this credit], but this can change depending on what happens at the federal level given all the changes and actions under the new administration," he said.
