DALLAS — The Louisiana State Bond Commission gave the go-ahead Thursday to a negotiated refunding of up to $700 million of outstanding state debt.

The sales is set for June 19 and 20.

State Treasurer John N. Kennedy, who chairs the bond commission, said the state is taking advantage of low interest rates in an effort to reduce debt service payments in fiscal 2013 and beyond.

“We’re looking at every possible refunding we can,” Kennedy said. He said $803 million of gas and fuels tax refunding bonds issued on May 1 provided $100 million in gross savings.

Senior underwriter on the refunding is JP Morgan Chase & Co. Co-managers are Barclays Capital, Loop Capital Markets, Morgan Keegan & Co. Inc., Stephens Inc., and Southwest Securities Inc.

Jones Walker LLP and Auzenne & Associates, LLC are bond counsel. The financial advisor is Lamont Financial Services Corp.

The June refunding will provide total debt service savings of $54 million, commission director Whit Kling said, with $44 million in present value savings.

“If we were going to market today, the sale would be $619 million,” Kling said. “There are a couple of series that we could pick up, depending on how the market moves.”

Kling said a $619 million refunding should provide $15 million of relief in fiscal 2013, and lower annual debt service payments by $2.9 million for the next 14 years.

The bonds will be issued in four series, Kling said, including one taxable tranche.

The taxable bonds were part of a tax-exempt, private activity Gulf Opportunity Zone bond allocation that was issued by a state agency but no funds have been expended. Kling said the bonds must be refunded as taxable debt because a for-profit entity was to be the beneficiary of the proceeds.

Refunding the GO Zone bonds will reduce the state’s arbitrage exposure on the debt, Kling said, but the exposure will linger through fiscal 2016.

Rep. Jim Fannin, D-Jonesboro, did not bring up a proposal he mentioned to reporters on Wednesday to delay state debt payments to provide up to $250 million to help balance Louisiana’s fiscal 2013.

Fannin, a member of the bond commission and chairman of the House Appropriation Committee, discussed the debt service delay Wednesday with House Speaker Chuck Kleckley, R-Lake Charles.

Fannin said the proposal was dropped because it would delay rather than end the state’s current budget impasse over the use of non-recurring revenues. He said he considered an option to pay down a portion of Louisiana’s outstanding debt, but rejected it because the savings would not be sufficient.

The commission approved a $75 million line of credit for Louisiana Citizens Property Insurance Co. It will provide emergency relief for hurricane insurance payments and other disaster recovery efforts if sufficient funds are not available.

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