The Massachusetts School Building Authority plans a $600 million sale of Series 2011B senior dedicated sales tax bonds through negotiated bid on Thursday after a one-day retail order period.
Barclays Capital is lead manager for the new-money deal. Bank of America Merrill Lynch and Citi are the co-managers.
The tax-exempt bonds are secured by first lien with a 1-cent pledge of Massachusetts’ 6.25-cent sales tax receipts. Proceeds will fund grants to cities, towns, and regional school districts for construction and renovation projects, and the 2011B senior debt-service reserve.
The serial bonds will mature from 2012 to 2021, and some term bonds will mature out to 2041.
Moody’s Investors Service assigned a Aa1 rating to the bonds. Fitch Ratings assigned a AA-plus. Both have a stable outlook.
“This revenue stream will continue to perform well over the long term, as indicated by its historical pattern of solid sales tax growth during periods of economic vitality,” Moody’s said in its report.
The MSBA will have about $4.46 billion of debt remaining after the sale, and $293.4 million of outstanding subordinate-lien dedicated sales tax bonds that Moody’s rates Aa2 and Fitch rates AA. Fitch said the lower rating on the subordinated bonds reflects the junior pledge to the senior bonds and the difference in the additional bonds test protections on the two liens.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is bond counsel to the authority. Greenberg Traurig LLP is disclosure counsel. Eckert Seamans Cherin & Mellott LLC is counsel to the underwriters.
Since its creation in 2004 to handle a substantial backlog of programs funded under the commonwealth’s predecessor program, the authority has paid out more than $8 billion in grants to the 1,700 schools.
Executive director Katherine Craven, who has run the agency since its inception and was first deputy to state treasurer Steven Grossman, will leave in December to run the University of Massachusetts’ school building authority.
Jack McCarthy, a former aide to Secretary of State William Galvin and inspector general Greg Sullivan, will be the MSBA’s interim executive director until a full-time replacement comes on board. James MacDonald is Craven’s replacement as second in charge under Grossman.
At UMass, Craven, who will succeed the retiring David MacKenzie, will coordinate the college system’s announced $3.1 billion capital plan. In late September, the governing board endorsed the multi-year plan to renovate and expand campuses statewide.
