Massachusetts will issue $621.4 million of general obligation, new-money debt this week in two separate transactions, offering $300 million through negotiation today and tomorrow before selling $321.4 million in a competitive deal set for Wednesday.

The strategy follows prior Maryland and Delaware GO sales that incorporated both negotiated and competitive deals that sold on consecutive days. Maryland sold $199 million via competitive bid on March 4 followed by a $291.5 million negotiated deal on March 5. Delaware issued $115 million through negotiation on Jan. 13 before a $121 million competitive offering the next day.

The commonwealth wanted to utilize a competitive deal yet also supply its paper to its retail market.

"We haven't sold bonds competitively in a number of years for a number of different reasons," said Colin MacNaught, the state's assistant treasurer for debt management. "By selling competitively, it allows us to re-benchmark prices for our bonds. By offering some of the bonds to retail only, it allows us to continue to offer bonds to individual investors in Massachusetts who have supported our transactions significantly over the past year."

Fidelity Capital Markets will price $300 million of Series 2009 B fixed-rate bonds for retail buyers today and tomorrow. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is bond counsel for the negotiated and competitive deals. Samuel A. Ramirez & Co. is the financial adviser on the competitive bonds.

Fitch Ratings and Standard & Poor's rate the transactions AA. Moody's Investors Service assigns its Aa2 rating.

The tax-exempt Series 2009B bonds include serial maturities from 2010 through 2029, with a $22 million term bond maturing in 2034 and a $21.3 million term bond maturing in 2038, according to the preliminary official statement.

To date, Massachusetts has sold nearly $820 million of debt in fiscal 2009, which began July 1, to retail investors. With the Series 2009B bonds, officials anticipate individual sales to account for more than half of the commonwealth's debt issuance in fiscal 2009, according to MacNaught.

"Enhancing our sales to individual investors, particularly Massachusetts investors, has been our goal," he said. "There are obvious benefits to having our bonds held as widely as possible - liquidity equals better pricing."

In looking at the competitive transaction, the tax-exempt Series 2009C bonds for $250 million offer serial maturities from 2010 through 2038. Series 2009D bonds for $71.4 million are taxable and contain serial maturities from 2010 through 2016.

This is the commonwealth's last bond sale for fiscal 2009, and it does not include taxable Build America Bonds. While the state declined to use BABs in this week's deals, officials have not ruled out BABs entirely.

"Like every large issuer, we continue to evaluate the Build America Bond option," MacNaught said. "Some of the early structures with long bullet maturities only, the lack of optionality, and some of the repricing in the secondary market gave us pause. This has started to change and we've seen spreads come in hard, so we'll continue to look at the BAB option for our next transaction and every transaction going forward while the program is still available."

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