DALLAS — The Louisiana State Bond Commission gave its approval Thursday for a general obligation refunding that could total up to $600 million.

The competitive sale of two series — one that targets post-2004 debt and one that refunds debt issued before then — is set for April 28.

Director Whit Kling Jr. said $500 million of outstanding debt has been identified that would qualify for the commission’s refunding threshold of 2% in present-value savings and 3.5% of savings on an aggregate issue basis.

Kling said in the current market, the state should realize significant saving through refunding outstanding GO debt. “We have identified some $40 million in savings by a refunding issue of approximately $500 million,” he said.

He said an analysis determined that the refunding would reduce debt service costs by $600,000 in fiscal 2010 and $3.3 million per year for the next 12 years.

Kling said the request is for $600 million of refunding bonds to enable Louisiana to refund additional outstanding debt if interests rates remain low.

“We won’t be able to gauge the final amount until just a couple of days before the sale,” he said. “We would be remiss not to achieve the largest savings possible.”

Freda Johnson, president of Government Finance Associates Inc., the state’s financial adviser, told commissioners the debt market remains favorable for refunding bonds.

She said the bonds should be attractive to investors who are looking for a tax-exempt alternative to the plentiful supply of taxable Build America Bonds.

“Last fall, BABs really caught on fire, but the state had a very successful sale of tax-exempt GO bonds in October,” Johnson said. “We think that is because the traditional tax-exempt market was not getting enough supply.”

“The refunding bonds should also be of interest to investors in April, as we’re not seeing the volume of tax-exempt debt that we would expect historically,” she added.

The commission approved a request for proposals for bond counsel services and underwriters on the upcoming sale of $500 million of fuel-tax revenue bonds. The proposals will be studied by a group of several commissioners and staff, which will report its recommendations to the full commission in April.

The fuel tax bonds will finance the next phase of the constitutionally mandated Transportation Infrastructure Model for Economic Development program. The sale is expected in July or August.

In other action, the commission approved a $400 million revenue bond deal by the East Baton Rouge Sewerage Commission that will include a mixture of tax-exempts and BABs.

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