CHICAGO — Triple-A rated Madison, Wis., today will competitively price $110.7 million of debt that features five series, most of which are taxable general obligation promissory notes.
Officials will take bids this morning, and the City Council will announce the awards at its meeting tonight.
The sale is part of the city’s annual borrowing to raise money for capital projects. Some of the new-money proceeds will also be used for transportation and economic development projects.
The debt is divided into five series, all of which is all secured by Madison’s GO unlimited-tax pledge.
Wisconsin’s capital city is rated Aaa by Moody’s Investors Service, the only rating agency with an underlying rating.
The new-money part of the deal includes three tranches of taxable notes, including $8.1 million of recovery zone economic development bonds, $25.4 million of Build America Bonds, and $6.1 million of GO debt.
The refunding debt is divided into two series, including $24.32 million of taxable GO bonds and $46.8 million of tax-exempt GO promissory notes.
Bidders are required to submit a bid for all four taxable issues, though each series will be awarded separately.
Madison is refunding the debt to achieve debt-service savings, and if adequate savings is not achieved through the competitive bids, the City Council will reject all bids, bond documents said.
The $6.1 million series and $8.1 million of recovery zone economic development bonds — which marks the city’s full volume cap allocation — will mature starting next year through 2020. The BABs will mature starting in 2015 through 2020.
Kutak Rock LLP is bond counsel and Springsted Inc. is financial adviser.
The offering likely will be the city’s last for the year, though officials plan to issue $15 million of water utility revenue bonds next month.
Moody’s affirmed its rating ahead of today’s sale, noting Madison is bolstered by a substantial and diverse tax base, stable employment, and the presence of the University of Wisconsin-Madison, the university system’s flagship campus.
City officials have traditionally maintained strong and conservative fiscal oversight that has led to a history of general fund surpluses.
Madison, like most cities, has seen its growth and revenue slow amid the national downturn. Moody’s said conservative budgeting and an ability to make mid-year adjustments will be “key points” in future credit reviews.
After today’s sale, Madison will have a total of $287.3 million of GO debt, all of which is in a fixed-rate mode. Nearly all of the debt amortizes within 10 years, Moody’s noted.
The city is expected to authorize borrowing of up to $137 million next year for capital projects.