The New Jersey Treasury Department received 12 responses from financial advisers to a request for proposals as the state looks to defease outstanding general obligation bonds.
Submissions were due Friday and officials will review the responses during the next few weeks. Responding were A.C. Advisory Inc., Acacia Financial Group Inc., Cityview Capital Solutions LLC, First Southwest, Goldman, Sachs & Co., Lamont Financial Services Corp., Phoenix Advisors LLC, Phoenix Capital Partners LLC, Powell Capital Markets Inc., Public Financial Management Inc., Public Resources Advisory Group and Scott Balice Strategies, according to James Petrino, director of the Office of Public Finance.
The state is sitting on $1 billion of various GO funds. It wants agencies and departments that are set to spend the funds to use them or return them.
The state will use any returned funds they no longer need to pay down outstanding bonds.
The unused funds might also be used to meet general fund expenditures that are connected to taxes or fees, according to Treasury spokesman Andrew Pratt.
The department is looking for a fiscal adviser to help New Jersey create a debt defeasance plan. The agreement will last one year and the state will have the choice to extend the contract for a second year.
The Garden State has $29.97 billion of outstanding debt, including $2.59 billion of GOs, as of June 30, according to the preliminary official statement for the state’s tax and revenue anticipation note deal that priced last week.
Debt-service costs take up $2.5 billion of the $29.4 billion fiscal 2011 budget, with $224.7 million paying for GO principal and interest costs. Fiscal 2011 began July 1.
The Treasury Department is also working on a $1.2 billion new-money and refinancing transaction for the New Jersey Transportation Trust Fund Authority that is set to price in late September or October.
The authority’s board is expected to vote on the deal at its next meeting on Sept. 2.
The board, which weighs in on each specific bond transaction, approved $1.6 billion of trust borrowing for fiscal 2011 in early May.
The Treasury Department must also present the bond sale to the Joint Budget Oversight Committee as the deal involves refinancing of debt. No date has been set for a hearing with the committee, Petrino said.
Barclays Capital is the book-runner for the $1.2 billion TTFA bond deal. The sale will include $800 million of new-money bonds that officials anticipate issuing as taxable Build America Bonds, depending on market conditions.
The deal will also include $400 million of refinancing to help create additional bonding availability in fiscal 2011, which began July 1.
Beginning in fiscal 2012, the trust will not have bonding capacity as its entire $895 million yearly allocation from the state will be needed to cover principal and interest payments on prior debt.
In addition to the TTFA bond transaction, Treasury officials anticipate a GO restructuring sale in mid to late September. Morgan Stanley will price the bonds.
The state’s fiscal 2011 budget includes $410 million of anticipated debt-service savings by delaying those payments to future years. The upcoming GO restructuring could reduce fiscal 2011 debt-service costs by $175 million.
The state already cut those costs by $208 million when it restructured school construction debt in April.
Moody’s Investors Service rates New Jersey Aa2. Fitch Ratings and Standard & Poor’s both rate it AA.
