Connecticut this week will issue $353 million of general obligation bonds, including $337.6 million of SIFMA index bonds, to retire bond anticipation notes that are coming due.

This is the state’s first SIFMA bond sale in which the state sells variable-rate bonds at a spread to the Securities Industry and Financial Markets Association index rate to be determined at pricing. It previously sold bonds based off of the London Interbank Offered Rate.

Morgan Stanley and Siebert Brandford Shank & Co. will price the bonds on Tuesday. Various law firms will serve as bond counsel on different portions of the transaction. P.G. Corbin & Co. and Acacia Financial Group are the financial advisers.

The tax-exempt Series 2011A bonds for $337.6 million will offer serial maturities from 2012 through 2018, according to the preliminary official statement. The taxable Series 2011A bonds for $15.4 million have one maturity in 2012.

Connecticut has about $14 billion of outstanding GO debt, according to Moody’s Investors Service, which rates the state Aa2. Standard & Poor’s and Fitch Ratings rate the credit an equivalent AA.

Matt Fabian, managing director of Municipal Market Advisors, said Connecticut should benefit from the muni bond market’s lack of supply and fewer higher-rated credits coming to market.

“There is a shortage of high-quality bonds generally,” Fabian said. “So for the SIFMA structure, it has its benefits and its risks, but the fact that there’s a shortage overall of bonds like Connecticut will make the sale go well regardless of how they structure it.”

Neighboring Massachusetts sold $146.2 million of GO SIFMA index bonds in February. Those bonds offer maturities from 2012 through 2015 and priced at par to the SIFMA rate plus a spread of 0, 30, 48, and 66 basis points, respectively, according to the official statement. Massachusetts carries an AA-plus rating from Fitch. Moody’s and Standard & Poor’s rate the commonwealth Aa1 and AA, respectively.

Fabian said Connecticut’s floating-rate bonds could attract investors looking for variable-rate debt.

“It addresses the retail fears of inflation risks,” he said. “So for people who are going to be putting it into their funds, they can talk about inflation durability.”

Connecticut plans to return to the market later this month with about $327 million of fixed-rate GO debt, including some taxable bonds. Most of those bond proceeds will refund earlier debt, with some going to help finance capital needs.

Officials are also working on issuing deficit bonds to help balance the current year budget.

The plan is to issue $647 million of economic recovery bonds by June 30, though an anticipated surplus of more than $200 million would help reduce the size of that deficit borrowing, according to the state’s Treasury Department. Lawmakers are currently working on legislation that would allow the state to apply the projected year-end surplus towards the borrowing.

The state has used such bonding in the past to help support operating needs. In 2009, Connecticut issued $915.7 million of economic recovery notes with debt maturing out to 2016.

Gov. Dannel Malloy, who took office on Jan. 5, released his $37 billion biannual budget for fiscal years 2012 and 2013 on Feb. 16. While the state faces a combined budget shortfall of $6.2 billion during the next two years, Malloy has said that he will not support future deficit bonding to help close those budget gaps.

In order to balance the biannual budget, the Democratic governor proposed $700 million of spending reductions, $1 billion of anticipated savings from employee concessions, and tax increases of $1.5 billion, according to the POS.

Revenue enhancements include adding five new tax brackets to the state’s income tax, which will generate more than $800 million during the next two years, boosting the sales tax to 6.25% from 6% and ending several exemptions to raise an additional $955 million in fiscal 2012 and fiscal 2013.

“Connecticut has used substantial one-shot solutions to balance its budgets in recent years, and the latest budget plan marks a significant departure from that approach,” according to a Moody’s report. “The plan includes a combination of spending cuts, reductions to compensation and benefits that will need to be approved, and a variety of tax increases.”

While Malloy is opposed to deficit borrowing, his future capital spending initiatives call for an increase in GO bonding to help finance infrastructure needs throughout the state.

The governor proposes increasing state GO borrowing by a combined $2.1 billion in fiscal 2012 and fiscal 2013, according to the POS. The additional bond proceeds will help finance clean water initiatives, transportation needs, and capital projects for the University of Connecticut.

The state last sold GO debt in October with a $567 million transaction that included $294.3 million of taxable Build America Bonds.

The only tax-exempt portion of the deal — $47 million of Series 2010D refunding bonds — priced with yields ranging from 0.30% on a 2% coupon for debt maturing in 2011 to 3% on a 5% coupon for debt maturing in 2022, according to the OS.

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