DALLAS -- After clearing up issues around a phony audit, the New Mexico Finance Authority returned to the bond market Wednesday with $43 million of bonds for revolving loans to local governments.
“We had an excellent reception from the market,” said Michael Zavelle, chief of investor relations for the NMFA. “We feel we very much have put the fake audit behind us.”
About 40% of the issue was sold during a retail order period Tuesday, with the rest going to institutions on Wednesday.
Bank of America Merrill Lynch served as senior manager on the negotiated deal, with Western Finance Group as financial advisor.
Chip Pierce, partner at Western Finance Group, said the strong retail order period was “a little healthier” than some previous issues.
With ratings of triple-A from Standard & Poor’s and Aa1 from Moody’s Investors Service with stable outlooks, the bonds were offered in serial maturities from 2014 through 2038.
On the long end, coupons of 3.625% drew yields of 3.78%.
Weakest demand was for maturities in the 2019-2021 range, with others oversubscribed or just hitting their target, Zavelle said.
In a roadshow before the pricing, NMFA emphasized that the senior-lien ratings were the same as before the revelation that an audit for the 2011 fiscal year had been faked.
“Every single investigation found that there was absolutely nothing in terms of money stolen or manipulation,” Zavelle said. “We’ve been keeping in close contact with investors throughout all of this. Underneath that, there wasn’t anything that really changed the market.”
Wednesday’s pricing was the first in 14 months on the NMFA’s credit. The previous issue in March, 2012, led to discovery that the audit used on that issue had not actually been conducted by the auditing firm listed in the official statement.
Former NMFA controller Gregory M. Campbell was later convicted on charges of submitting a forged audit for the fiscal year 2011 and circulating that audit to bond investors.
Investigators could find no evidence of malfeasance and attributed the failure to obtain a clean audit to misplaced concerns about maintaining the agency’s credit rating.
