While its top lawmakers complete a budget that reflects a higher-than-expected revenue shortfall projection, Massachusetts will come to market the week of June 27 with three bond sales totaling about $900 million.
"Massachusetts tops the calendar [for the week]," said Alan Schankel, a managing director at Janney Capital Markets.
The commonwealth intends to sell $250 million of general obligation taxable new-money green bonds, $450 million of tax-exempt refunding GOs and remarket another $200 million. Barclays is lead manager for the remarketing, while Bank of America Merrill Lynch will manage the other sales.
Moody's Investors Service rates the three series Aa1 with a stable outlook. Fitch Ratings and S&P Global Ratings both assign AA-plus ratings with respective outlooks of stable and negative.
In a June 14 memo to investors, Gov. Charlie Baker's secretary of administration and finance, Kristen Lepore, projected tax collections in fiscal 2017 will fall $450 million to $750 million short of the benchmark. She pegged the estimate after consulting with the state Department of Revenue and independent economists.
"Massachusetts, like other similarly situated states, has experienced volatility in withholding and a softer than anticipated spring filing season," the memo said.
Under state law, a committee of House and Senate negotiators is meeting to work out a final budget proposal. The House in April approved a $39.5 billion plan, while the Senate in May after adding some spending during floor debate, approved a fractionally higher $39.6 billion version.
The new fiscal year begins July 1. Baker has asked lawmakers to consider a $5.3 billion contingency plan to cover first-month expenses.
Options for plugging the gap include a sharp reduction in a planned $206 million contribution to the rainy-day fund to canceling the statewide sales tax summer holiday.
Massachusetts, the first U.S. to offer bonds under the green, or environmentally beneficial category, held similar sales in 2013 and 2014.
It funds projects that fall within five green project categories – stormwater; energy efficiency and conservation in state buildings; open-space protection and environmental remediation; river revitalization and habitat restoration; and the New Bedford Marine Commerce Terminal.
The commonwealth has $20.9 billion of GO debt outstanding; $17.3 billion, or 83%, is fixed-rate with the remaining $3.6 billion in variable rate.
Massachusetts plans another wave of issuance in August and September. "As you can see, it's going to be a busy few months," assistant treasurer for debt management Sue Perez told investors on a conference call.
According to Perez, Massachusetts intends to sell $200 million of grant anticipation note bonds, or GANs, to help fund the accelerated bridge program and $250 million to $400 million of bonds for a rail enhancement program, which is part of the commonwealth's transportation funding credit.
It also envisions a $200 million issuance of SIFMA refunding bonds, linked to Securities Industry and Financial Markets Association interest rates; and roughly $1 billion of revenue anticipation notes.
