The Massachusetts School Building Authority intends to sell $1 billion of senior sales tax refunding bonds over the next two weeks.
MSBA, which the commonwealth established in 2004 to replace its former school building assistance program, plans a $700 million sale of Series C bonds around Nov. 17, after a one-day retail period, and a $300 million sale of Series D bonds around Dec. 1, following a tender on the bonds to be refunded.
Series C bonds will refund a portion of Series 2007A bonds, according to a preliminary official statement. Final maturity is Aug. 15, 2037. A gross pledge of 1 cent of dedicated statewide sales taxes secures the bonds.
According to an authority spokesman, a board vote required a minimum 6% savings of net present value.
Fitch Ratings and Standard & Poor's rate the bonds AA-plus. Moody's Investors Service rates them Aa2.
"Bondholders benefit from the statutory dedication of the tax for school capital purposes," Fitch said in a report. "Dedicated revenues are segregated from the Commonwealth general fund, and the Authority has no role in funding school operations. Strong legal covenants protect against diversion of revenues or lowering of the tax rate, although the base can be changed."
The authority finances grants to cities, towns, and regional school districts for school construction and renovation projects.