BRADENTON, Fla. — The Florida Hurricane Catastrophe Fund Finance Corp. sold $2 billion of taxable bonds Wednesday that were oversubscribed by investors looking for yield.

Though the deal sold with spreads that were better than Treasuries, it also sold better than the FHCFFC anticipated, according to Florida Division of Bond Finance Director Ben Watkins.

Underwriters expected that the minimum level for the blended rate on the transaction would be around 3%.

"We came in at a blended rate of 2.61%," Watkins said. "2.61% was significantly through or better than what we had been estimating so we were very, very pleased."

The double-A rated deal sold with $500 million at an interest rate of 1.29% maturing in 2016; $500 million with a 2.1% interest rate maturing in 2018; and $1 billion with an interest rate of 2.99% maturing in 2020.

Compared with the 30-year Treasury rate of 2.99% on April 5, the FHCFFC's three-year bonds sold with a spread of plus 95 basis points, the five-year bonds sold with a spread of plus 137.5 basis points, and the seven-year bonds sold at plus 180 basis points.

The state-run, nonprofit Florida Hurricane Catastrophe Fund will use bond proceeds as "pre-event" liquidity to make timely payments for hurricane reinsurance claims if needed during this year's tropical storm season, which typically runs from June through November.

There was more demand than bonds available in some maturities, said Jack Nicholson, director of the so-called Cat Fund. A record 139 buyers participated in the deal compared with taxable offerings in prior years.

"Just having this many buyers is a good thing," he said. "I'm very pleased, and I think it was totally successful."

Nicholson and Watkins attributed the demand to investor education.

"The extensive pre-marketing that we did paid off," Watkins said. "And people were looking for yield."

Watkins also said there was "very broad participation" in the transaction, though there was no demand from property and casualty companies. "They view it as sort of double exposure if you will," he said.

If all goes as planned, the April 10 transaction could be the last time investors see the Florida Hurricane Catastrophe Fund Finance Corp.'s name in the bond market.

Several bills before the Florida Legislature contain provisions to rename the FHCFFC to the State Board of Administration Finance Corp. The SBA, composed of the state's top elected officials, oversee the agency.

Changing the name of the credit that sells bonds for the Cat Fund has been a goal for several years.

Nicholson said the agency has encountered difficulty with prospective investors, confusing it with a typical property insurer that sells catastrophe bonds, neither of which is true.

Though the Catastrophe Fund provides low-cost reinsurance to help stabilize the property insurance market, its revenue bonds are secured by the agency's fund balance and ability to assess a percentage on nearly all property insurance policies in the state. The assessment structure is often described as being tax-like in nature.

"The problem has been that with our name people think we're like a cat bond or confuse us with an insurer," Nicholson said. "We've heard that more and more as time goes on."

He said a number of investors have actually suggested the name change, and switching names made the most sense since the State Board of Administration oversees the fund.

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