BRADENTON, Fla. - Louisiana is receiving inquiries asking how the state successfully priced $111.67 million in "unconventional" unclaimed property special revenue bonds.
The JPMorgan-led 20-year deal was awarded Dec. 18 at a true interest cost of 4%, Whit Kling told the State Bond Commission meeting a day after pricing.
Kling said his office has received "a lot of phone calls from other states asking how to do it," and, he added, the complicated transaction got a surprising level of retail participation for a "first of its kind" offering.
The novel deal securitized annual amounts of net revenues the state receives from unclaimed property that, since 2008, had been used for pay-as-you-go highway spending. Bond proceeds are being used to match federal funds to finance two Interstate 49 projects.
A backup pledge by the state to replenish the debt service reserve fund, if necessary, helped the bonds win an Aa3 rating from Moody's Investors Service, which was one notch off the state's Aa2 rating, and an AA-minus rating from Standard & Poor's.
Financial advisor Renee Boicourt with Lamont Financial Services Corp. said there was a lot of interest in the bonds for such an "unconventional" security.
"Nobody had ever seen one of these things before, and I do think you will have a lot of other states copying it," said State Treasurer John Kennedy, who chairs the commission.
The transaction priced to yield 0.45% with a 3% coupon in 2015, 3.62% with a 5% coupon in 2025, and 4.54% with a 5% coupon in 2033.
Other underwriters participating in the deal were Morgan Stanley & Co., Stephens Inc., and Drexel Hamilton LLC.
Foley & Judell LLP was bond counsel. Breazeale, Sachse & Wilson LLP was underwriters' counsel.
Also at the Dec. 19 Bond Commission meeting, Kennedy announced that it would be the last meeting for Whit Kling, who is retiring after 40 years with the state of Louisiana in various jobs, including the last eight years as bond commission director.
"Probably the most important of anything [Kling] has done is handling the state's finances during five hurricanes and the worst recession," Kennedy said, jokingly adding that the commission would like to have Kling come back any time and "talk to us about hard puts."
Kling said he'd had a "very good career" and was leaving the commission in good hands with "extremely competent" staff.
The state is taking applications for a new director.