Hot on the Heels of Note Success, Wisconsin Readies GOs

CHICAGO — Wisconsin will take bids on $338 million of new-money general obligation bonds on July 20, fresh from capturing its lowest rate in recent memory on an $800 million note sale that was held last week.

The bonds will mature between 2013 and 2032. Proceeds will finance bricks-and-mortar projects approved by the State Building Commission, according to capital finance director Frank Hoadley.

The rating agencies have not yet issued updated reviews, which will be the first to factor in the state’s new $66 billion, two-year budget.

All three major rating agencies rate Wisconsin’s $7.2 billion of GOs in the mid-double-A category with stable outlooks.

Gov. Scott Walker signed a budget last month that closely mirrored his original proposal by dealing with a $3 billion deficit primarily with cuts.

The spending plan does not include any general tax increases and it cuts deeply into education, local government, and health care spending.

The state received 45 bids from 15 underwriters on its July 6 note sale, capturing a 0.22% rate for a state low on note issuance, Hoadley said.

Wells Fargo Securities won $750 million of the note offering and Goldman, Sachs & Co. won the remainder of the issue.

Hoadley attributed the low rate to scant supply and strong demand “for a sovereign state that is in fairly decent financial shape.”

The notes don’t feature a general obligation pledge, but Wisconsin is obligated to deposit all general fund revenues, other than those required to pay its GO debt, into a note-redemption fund to cover repayment.

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