DALLAS — The Louisiana State Bond Commission gave its go-ahead on Thursday to the third segment in a series of variable-rate fuel tax bonds that will provide a total of $485 million in proceeds this year to a constitutionally mandated road and bridge program.
Commissioner of administration Angèle Davis said the state will price next week the $121.1 million of taxable Build America Bonds approved by the commission.
Underwriter on the issue is Merrill Lynch & Co. Financial adviser is Government Finance Associates Inc. Bond counsel is Foley & Juddell LLP.
The bonds are rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s.
With the sale, a third of the four floating-to-fixed interest rate swap agreements reached in 2006 on the $485 million of bonds for the state’s Transportation Infrastructure Model for Economic Development capital improvement program, known as TIMED, will be effective.
Next week’s $121.1 million BAB sale will make effective the 25% of the swap agreement held by Merrill Lynch under an agreement reached between the state and swap providers in December 2006.
Talks are under way to resolve the fourth and final swap agreement, for the 12.5% of the swap held by Citibank NA, said Meredith Hathorn of Foley & Juddell.
“We’re still negotiating,” she said. “It’s not final, but we’re close.”
A sale of $60.6 million of bonds, which will probably not be BABs, is planned to implement the agreement with Citibank. The sale is expected before the extension to the swap agreement terminates June 1.
The state resolved 50% of the fixed-to-floating interest rate swap held by JPMorgan Chase Bank and the 12.5% held by Morgan Keegan & Co. with two series of bonds issued earlier this month.
The previous sales included $200 million of variable-rate tax-exempt debt enhanced with a letter of credit from JPMorgan Chase and $103.1 million of taxable BABs.
The bonds are supported by the state’s 20-cent-per-gallon tax on gasoline and diesel, including the four cents dedicated by the state constitution to the TIMED road and bridge effort.
Bond Commission director Whit Kling Jr. said the state will issue $500 million of fuel-tax bonds next year to complete the authorization for TIMED. The bonds must be sold by Dec. 31, 2010.
The Louisiana Community and Technical College System will receive $200 million in proceeds from a program authorized by the state legislature in 2007 and approved by the bond commission on Thursday.
The tax-exempt revenue bonds will be issued by the Louisiana Community Development Authority.
Joe May, president of the community college system, said the first $65 million will be issued in August. The schedule calls for additional sales of $75 million in 2010 and $60 million in 2011.
The proceeds will finance 23 projects at 14 local colleges. The work is to be completed in 2013.
The board deferred action on a report on the amount of net state tax-supported debt after Davis said it contained higher levels of future debt than is now planned.
Davis said the state currently expects to issue $500 million of debt for state projects in 2010, $400 million in February 2011, and then approximately $300 million every other year beginning in 2013.
The state constitution limits annual debt service on tax-supported debt to 6% of general fund revenues.