DALLAS — Mississippi will take a $675.2 million, multi-part general obligation bond issue to market next week that will finance state capital improvement projects, provide funding for economic development efforts, and refinance existing debt.
Mississippi Treasurer Tate Reeves said the four-series sale is set for the week of Oct. 3, but the pricing date for the refunding issue may be adjusted for market conditions during the week.
Reeves said the proceeds will support critical infrastructure needs for community colleges, state universities, and state agency facilities.
“The bonds will also maintain our highway bridge program and our most recent economic development projects,” he said.
Bond proceeds are used to finance a variety of economic development efforts in the state, Reeves noted.
“As a result, we will have created 2,000 direct jobs for Mississippians, and that speaks volumes for our ability to recruit businesses,” the treasurer said. “Our focus on matching economic development incentives to growth sectors of our economy has resulted in higher-paying jobs.”
The deal includes $29.6 million of tax-exempt refunding bonds, $30.6 million of taxable refunding bonds, $357.3 million of new-money tax-exempt GOs for capital improvement projects, and $261.3 million of taxable GOs to refinance several short-term notes and fund state and local economic development programs.
Mississippi’s outstanding debt currently carries ratings of AA by Standard & Poor’s, Aa2 by Moody’s Investors Service and AA-plus by Fitch.
The state had a total of $3.75 billion of outstanding GO bonds supported by general fund revenues on Sept. 1. It has no outstanding revenue debt.
Reeves said the sale will continue the tradition of a fall bond issue.
“Our legislative session runs from January to early April,” he said. “We begin planning in the summer based on legislation passed during the most recent session, and sell bonds in October or November each year.”
The underwriting team for the four series includes Bank of America Merrill Lynch, Morgan Stanley, Morgan Keegan & Co., Stephens Inc., Duncan-Williams Inc., Crews & Associates Inc., Jefferies & Co., Kipling Jones & Co., Loop Capital Market, and Mesirow Financial Inc.
Morgan Stanley and Bank of America are lead managers on $353.7 million of Series A tax-exempt capital improvement GO bonds and the $261.3 million of Series C taxable economic development GOs.
Morgan Keegan and Stephens are co-senior managers of the Series B and D refunding and economic development series.
Co-bond counsel for the state are Baker, Donelson, Bearman, Caldwell & Berkowitz PC and Butler, Snow, O’Mara, Stevens & Cannada PLLC.
Lindsey Carter, a vice president with Morgan Keegan, said Mississippi avoided unnecessary issuance costs by combining the four series into one sale. “There are significant economies of scale with doing all four concurrently,” she said.
The new-money offering is firm, but the size of the refunding remains fluid due to market fluctuations, according to Carter,.
“Those numbers could change up to the afternoon before the sale,” she said. “The amount being refunded will depend on the market.”
Gavin Murrey, managing director for Morgan Keegan, said the timing of the issuance should benefit the state. “We’re seeing some of the lowest rates in recorded history,” hesaid. “We’re hoping to catch the market at the right time.”
Mississippi’s strong financial outlook makes it an attractive credit in the current market, according to Murray.
“We expect a lot of investor interest, based on the strong interest in Mississippi’s debt shown in recent sales,” he said. “Mississippi is a strong credit.”
Reeves said the state has a history of conservative fiscal management.
“We pay our debt on time, we have healthy reserves in our working cash stabilization reserve fund, and our proactive approach to fiscal management has allowed us to maintain financial stability through subsequent revenue declines,” the treasurer said. “All of these are reasons why I believe Mississippi is well-positioned to have a successful bond sale this year.”
The refunding issues consist of $29.6 million of tax-exempt Series 2011B bonds and $30.6 million of taxable Series 2011D debt. The refunding bonds are not subject to optional redemption.
Proceeds from the $29.6 million of tax-exempt SeriesB bonds will be used to advance refund several maturities of the $20.2 million of outstanding debt from $254.9 million of refunding GOs issued in 2002, and to advance refund and defease $7.7 million outstanding from $20 million of bonds issued in 2003 for the state’s local bridge repair and rehabilitation projects
The tax-exempt series will also currently refund $5.4 million of outstanding debt from a $61.7 million state GO sale in 2004, and advance refund and defease portions of $150.3 million of GOs sold in 2005.
Proceeds from the taxable $30.6 million Series D will advance refund and defease $27.6 million of the outstanding debt from an $80.3 million taxable issue in 2003.
The Series A bonds will finance state and local projects across Mississippi, with large segments earmarked for transportation and higher education facilities.
The program to replace or repair bridges on state highways will receive $36 million from the capital improvement segment of the bonds, with another $31 million dedicated to city and county bridge projects.
Proceeds will provide $97.5 million for projects at state universities and agencies, including $11.6 million for new offices for the state medical examiner and state crime laboratory, $11.3 million for a new business school and campus renovations at the University of Southern Mississippi, and $10 million for renovations and upgrades at Mississippi State University.
Separate allocations will provide $14.6 million and $5.5 million for projects at community and junior colleges across the state.
The Department of Revenue will receive $18.7 million of the proceeds from the Series A bonds to expand and upgrade its information technology systems.
Proceeds from the $261.3 million of taxable Series C bonds will fund various economic development loans, grants, and programs in Mississippi.
Reeves said the use of GO bond proceeds for economic development has been a success in Mississippi.
“These programs have been developed as part of a proactive approach by our current administration to strengthen our position in the global marketplace and entice new businesses to locate within the state,” the treasurer said. “The goal is to attract high-tech companies involved in advanced manufacturing, with the ultimate goal to provide more, high-paying jobs for Mississippians.”
The taxable bonds will provide $113 million for a revolving fund used to provide loans or grants to local governments to build infrastructure for large economic development projects, and $20 million for a program focusing on land and equipment acquisition for smaller efforts.
The state will be reimbursed $80 million for a short-term economic development note issued in July.
The state can use the taxable GO bond proceeds to help local governments improve transportation, education, recreation, and medical facilities within a 65-mile radius of a major private sector or U.S. government project. The developers must agree to make a minimum initial investment of $300 million. Proceeds can be used to pay for the costs of recruiting, screening and training employees.
For smaller projects, Mississippi provides low-interest loans from the GO bond proceeds to counties and cities so they can acquire land for development as well as improve facilities or infrastructure.