BRADENTON, Fla. - Louisiana officials say they are pleased with results of the bond anticipation note deal that closed last week, which will "bridge" the state through uncertain fiscal times.
The $254.6 million of BANs were directly placed with JPMorgan at a true interest cost of 0.52%, said financial advisor Renee Boicourt with Lamont Financial Services.
The final rate was lower than the best proposal submitted to the state when the process of seeking short-term borrowing products began in early November, Boicourt told the State Bond Commission Friday.
The BANs will replenish the state's capital outlay escrow account, which funds state and local projects approved by the Legislature and the governor.
The notes are expected to be taken out with long-term general obligation bonds in August.
"I think, all in all, this will prove to have been a very efficient way to bridge through this period and have money for capital outlay throughout the next six or seven months," she said.
Louisiana hasn't issued BANs in at least two decades, said Bond Commission Chairman John Kennedy.
"It worked out real well," Kennedy said, calling the cost of the interim financing "cheap money."
Kennedy said Louisiana typically issues GO bonds to replenish the capital outlay escrow account, which would have required a detailed official statement for investors at a time when "things are changing [and] the Legislature will be meeting shortly to look at the budget issue.
"We decided it would be better to do a short-term loan right now," he said, explaining the strategy for the benefit of new board members who recently took office.
The Bond Commission sought proposals for unrated, short-term products before last fall's election to replace Gov. Bobby Jindal, a Republican who was term-limited out of office.
Around the same time, state lawmakers were considering strategies for closing a $500 million mid-year shortfall, which were eventually approved.
Gov. John Bel Edwards, a Democrat, was elected on Nov. 21.
About a month later, Edwards' administration announced that the state is facing an additional current-year general fund shortfall of $750 million, as well as a $1.9 billion shortfall in fiscal 2017.
Edwards has said he plans to call a special session of the Legislature in a few weeks to address the budget shortages and to enact measures that would permanently address structural issues.
