BRADENTON, Fla. Florida has saved $220 million on refundings so far this fiscal year, and more such deals are on tap, according to the state’s bond director.
“We’ve been the beneficiary of extraordinarily favorable market conditions and continue to pursue refundings when the opportunities present themselves,” Ben Watkins told Gov. Rick Scott and the Florida Cabinet on March 10.
Since the beginning of fiscal 2015, the Division of Bond Finance has refunded nine transactions totaling $1.4 billion to generate present value savings of $220 million, he said.
During the same nine-month period, the bond division has issued only $115 million in new money bonds for transportation projects.
Watkins told the Cabinet that the bond market is currently focused on when there will be “Fed liftoff,” referring to when there will be a change in accommodative monetary policy that moves interest rates upward.
“We continue to enjoy very favorable interest rates,” he said, while asking the Cabinet to approve the issuance of up to $1.16 billion in bonds.
Of the total approved by the Cabinet, only $195 million is earmarked for new money to finance projects in the Florida Turnpike’s five-year-work plan.
The transactions approved by the Cabinet include up to $590 million in State Board of Education public education capital outlay refunding bonds, $300 million in Department of Transportation right of way acquisition and bridge construction refunding bonds, and $80 million of turnpike revenue refunding bonds.
On March 9, Standard & Poor's affirmed Florida’s AAA general obligation rating, and its AA-plus rating on appropriation debt. The outlook is stable.
S&P said the rating reflects the state’s general revenue growth, structural budget balance, and very strong reserves. Other factors include the state’s moderate and declining debt burden due to principal amortization exceeding new debt issuance.
“We expect that the state's debt burden will remain manageable and not increase significantly based on current debt authorization and bond issuance plans, including public-private partnerships project obligations,” S&P said.
Florida has entered P3 agreements for the Port of Miami Tunnel, Interstate 595, and the Interstate 4 Ultimate, which have combined construction and availability payment costs of $7.9 billion over the next 40 years, according to the state’s 2014 debt affordability study.
Florida has not issued bonds for the P3 projects, but the construction and long-term maintenance payments to be paid through the DOT’s annual budgets and tolls - are considered outstanding debt by the state and rating agencies.
The state’s GO bonds are rated AAA by Fitch Ratings and Aa1 by Moody's Investors Service. Florida had $24.2 billion in direct debt outstanding as of June 30, 2014.