Connecticut, which held a $575 million general obligation bond sale for GAAP conversion on Thursday, plans to follow up with a $325 million sale of GO refunding notes on Oct. 23, state Treasurer Denise Nappier said.
All four major agencies affirmed Connecticut’s GO rating. Moody’s Investors Service assigned Aa3, while Standard & Poor’s, Fitch Ratings and Kroll Bond Rating Agency rate Connecticut AA.
Nappier and state Office of Policy and Management Secretary Benjamin Barnes met with rating agency officials in New York last week.
Nappier called the ratings “recognition that the planned financings represent an important component to providing enhancements to the state’s long-term fiscal health.”
Connecticut sold $132.7 million in retail orders on Wednesday, in a one-day prelude to the $575 million sale to fund half of the state’s conversion to budgeting under generally accepted accounting principles.
State officials estimate Connecticut’s GAAP deficit at $1.2 billion. GAAP conversion was a campaign theme of Gov. Dannel Malloy in 2010.
Maturities for the GAAP conversion bonds range from 2015 to 2027. The bonds will include a covenant committing the state to funding the balance over a specified time through annual budget appropriations.
According to Nappier, the retail orders exceeded the $123.5 million the state sold over the summer to benefit UConn 2000, the $2.3 billion, 20-year state investment in University of Connecticut infrastructure.
In its other October sale, Connecticut will refinance a portion of the state’s outstanding Series 2009A economic recovery notes by extending the final maturity from 2016 to 2018. According to Nappier, this transaction will also mark the inaugural issues of variable-rate remarketed obligations, a new structure for variable rate notes issued without a liquidity bank.
“Both of these bond sales are unique and innovative,” said Nappier.
Ramirez & Co. is the senior manager on the GAAP conversion sale and Barclays is the sole underwriter on the refunding notes. Day Pitney LLP and Finn Dixon & Herling LLP are disclosure counsel for the GO sales. Robinson & Cole LLP and Soeder & Associates LLC are tax counsel. Acacia Financial Group Inc. and A.C. Advisory are financial advisors for both sales.
