JPMorgan will provide New Jersey with a $2 billion cash-flow borrowing facility, beating out 10 other firms to supply the Garden State with needed liquidity until it issues its yearly note deal.
Underperforming revenue streams have depleted the state’s cash flows. Officials may utilize the $2 billion credit line to meet spending needs in early fiscal 2010 as New Jersey will issue its annual tax and revenue anticipation note transaction in August or September.
Other banks that responded to the Treasury Department’s request for proposals include Bank of America NA, Barclays Bank PLC, Citi, Goldman, Sachs & Co., Jefferies & Co., Morgan Keegan & Co., Morgan Stanley, PNC Bank NA, Bank of Nova Scotia/Dexia Credit Local, and TD Bank NA.
New Jersey may enter into a revolving credit agreement or similar loan facility, a capital markets transaction, or an alternative approach, according to the RFP. Officials expect to repay any funds drawn under the borrowing facility with proceeds from the upcoming Tran deal.
Last month, officials announced a new $1.2 billion shortfall for the remaining six weeks of fiscal 2009, which ends June 30, bringing the state’s total deficit for the year to $4.4 billion. Contributing to the $1.2 billion funding gap is a $747 million drop in April income tax receipts over prior estimates.