DALLAS — The Louisiana State Bond Commission has approved a two-tranche, $324.8 million sale of state general obligation bonds for Oct. 27.
The competitive sale will include $200 million of new money and $124.8 million for refunding of outstanding debt from a 1998 bond sale. The commission opted to move its next meeting to Oct. 27 to facilitate the sale.
The new money will finance high-priority projects on the capital outlay list developed by the Legislature.
The state is attempting to whittle down a capital outlay backlog estimated at more than $1 billion with new legislation that limits the addition of new projects to the list, said commissioner of administration Angèle Davis.
“Next year each of the local projects must include a feasibility study and will require local matching funds,” she said. “This is the last project list where inclusion on the list assumes it is feasible.”
The Legislature can waive the requirement for matching funds if it would create an economic hardship on the local government, Davis said.
Louisiana’s GO debt is rated A-plus by Fitch Ratings and Standard & Poor’s, and A1 by Moody’s Investors Service, but Treasurer John Kennedy said the state will seek an upgrade of its debt ratings with the upcoming GO issue.
“We’re going to be meeting with the rating agencies beginning next week, and I expect a lot of tough questions in this economic climate,” he said. “But we’re doing better than a lot of states, and I’m going to push for an upgrade.”
The commission approved the underwriting team for a requested $102 million lease-revenue refunding bond issue requested by the Louisiana Office Facilities Corp.
Barclays Capital will be the senior manager, with Morgan Stanley as co-senior manager. Loop Capital Markets LLC and Stephens Inc. will be co-managers.
The commission rejected an effort by House Speaker Jim Tucker to add two more underwriters to the four-firm team.
Tucker suggested adding JPMorgan and Morgan Keegan & Co. as co-managers to provide additional coverage to the retail side. He said the state expects 40% of the bonds to be sold to retail investors, and would benefit from additional retail emphasis.
“I want to see the retail oversubscribed and repriced to the state’s benefit,” he said.
Whit Kling Jr., director of the Bond Commission, said he believed the issue is too small to require six underwriters.
“I don’t know if there are enough bonds here to get active group participation from that many underwriters,” he said.
Kennedy said he concurred with Kling’s assessment that the underwriting team should be limited because of the size of the issue.
“If you get too many cooks in the kitchen, the cooks can get discouraged and they might leave the kitchen,” he said.
The commission approved an election in East Baton Rouge Parish on Nov. 14 on increasing sales and property taxes to support $901 million of revenue bonds for capital improvements. Commissioners also approved $300 million of Gulf Opportunity Zone bonds for a shipping facility in Plaquemines Parish that will exhaust the parish’s allocation of the bonds.
