Connecticut treasurer hails retail buy in to recent bond sale
Connecticut’s $850 million sale of special tax obligation bonds drew $478 million of retail orders – a record level and nearly 83% of the bonds available that day, according to state Treasurer Denise Nappier.
The state on Oct. 15 and 16 issued $750 million of Series B bonds for infrastructure improvements statewide, and a $100 million refinancing. The sale is scheduled to close Thursday.
The refunding bonds, said Nappier, will provide $12.4 million of debt service savings over eight years, with a true interest cost of 3.02%.
“This bond sale will help finance critical improvements to the state’s aging transportation infrastructure, and not a moment too soon,” Nappier said in a statement.
“Still, in order to be successful from a longer term perspective, given the magnitude of our infrastructure requirements, Connecticut will need a more robust and forward-looking approach with innovative capacity building financing tools, such as public-private partnerships and alternative revenue sources.”
The Oct. 15 dedicated retail period drew $455 million. Total orders for the institutional period the next day approached $1.2 billion for the remaining $395 million in bonds offered. Follow-up from individual investors resulted in an additional $23 million in retail orders, pushing retail up to $478 million.
Nappier’s office gives individual investors priority during bond sales.
Taken together, orders over the two-day order period came in at just under $2 billion. With many maturities oversubscribed, the bonds were repriced to lower yields. Interest rates were lowered from 1 to 5 basis points across more than half the maturities, bringing the true interest cost of the 20-year, new money bonds to 3.96%, according to Nappier's office.
The new money bonds priced to yield between 2.14% for the 2019 maturity to 3.97% for 2038.
The spread to the benchmark Municipal Market Data index over the final maturities ranged from 70 to 75 basis points, a 2- to 5-basis point improvement from the previous STO transaction in January.
Specific projects to receive funding from the new-money bonds will include: the Interstate 91-state Route 15 interchange in Hartford; the I-95 Gold Star Memorial Bridge; the Walk Bridge replacement project in Norwalk; the I-84 Waterbury improvement program; and the purchase of an additional 60 new M8 rail cars for the Metro-North Railroad New Haven line fleet.
S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency rated the bonds at AA, A-plus and AA-plus, respectively, all with stable outlooks.
Updike, Kelly & Spellacy and Lewis and Munday were co-bond counsel for the sale. Raymond James & Associates led the underwriting team. Pullman & Comley was underwriters’ counsel. Public Resources Advisory Group and Public Financial Management were co-financial advisors.