Utah To Reconsider $235M Refunding in September

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DALLAS - Utah called off a $235 million refunding that had been tentatively scheduled for Sept. 3 but will continue watching for an opportunity, state Treasurer Richard K. Ellis said.

"It was right on the cusp," Ellis said Aug. 26 after making the decision to withhold the competitive deal. "We may reconsider in September."

Ellis said falling Treasury rates were a factor in the triple-A state's decision to hold off on the refunding.

"That's working against us on the arbitrage and escrow," he said.

Jon Bronson, managing director at Zions Bank, is the state's financial advisor.

Utah keeps its borrowing costs low not only with its credit rating but by issuing short maturities of 10 years or less.

Ratings agencies have affirmed the Utah's triple-A rating.

Utah is one of the few states where state pensions are almost fully funded.

The state's debt as of June 30, 2013 was $3.22 billion of general obligation bonds and $282 million of lease-revenue bonds outstanding, according to Standard & Poor's. That translates to debt per capita of $1,326, or 3.3% of state GDP and 3.83% of total personal income, which S&P considers to be moderate.

The state is subject to a constitutional debt limit of up to 1.5% of taxable property value in the state, and it has capacity to issue up to $1.29 billion. The state anticipates only issuing up to about $107 million during the next two years.

"Based on the analytic factors we evaluate for states, on a four-point scale in which '1' is the strongest, we have assigned Utah a composite score of 1.5," S&P analyst Gabriel J. Petek wrote in his Aug. 18 report. "Adding to the stability of the state's credit quality, in our view, is that its revenues are once again in a growth mode, and the state has already accommodated the loss of federal stimulus funding in its programmatic service levels."

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