Massachusetts is set Wednesday to issue via competitive bid $358 million of taxable general obligation Build America Bonds and $1.2 billion of tax-exempt GO revenue anticipation notes.
The BAB proceeds will help finance the state’s capital investment program while the short-term notes will assist with its cash-flow needs.
Nixon Peabody LLP is bond counsel for both the BAB and note transactions. There is no outside financial adviser.
The $358 million of Series 2010D BABs are scheduled to price Wednesday at 11 a.m. Eastern Daylight Time and the tax-exempt Series 2010A, B, and C notes will also price that same day, according to the preliminary official statements for both securities.
The Series 2010D bonds will offer serial maturities from 2028 through 2031, with the bulk of the debt, $216 million, maturing in 2030, according to the POS.
Moody’s Investors Service rates Massachusetts Aa1. Fitch Ratings and Standard & Poor’s rate it AA-plus and AA, respectively.
The state has more than $17 billion of outstanding GO debt, according to Moody’s.
Its last BAB deal was $450 million that Morgan Stanley won through competitive bid on May 5. The Series 2010A BABs includes serial maturities that increase annually from 2024 through 2027, according to the deal’s official statement. There is also a $300 million term bond due in 2029.
All of the Serial 2010A maturities priced at par. Some $15 million of debt maturing in 2024 priced with a 4.48% coupon, $25 million due in 2025 priced with a 4.58% coupon, and $35 million maturing in 2026 priced with a 4.68% coupon. In 2027, $75 million of bonds are due that carry a 4.76% coupon. The $300 million term bond maturing in 2029 has a 4.91% coupon.
The federal government pays issuers of BABs a 35% subsidy on interest costs.
This year’s tax-exempt note transaction includes $350 million of Series 2010A notes that will mature April 28. Series 2010B and C notes are $425 million each and will mature May 26 and June 23, respectively.
Last year, the commonwealth sold via competitive bid the same amount of GO notes, $1.2 billion, with a similar structure.
The notes priced on Sept. 15 at 2.5% with reoffering yields ranging from 0.29% to 0.313%, according to the deal’s official statement. There were several winning bidders for the 2009 notes. Goldman, Sachs & Co. purchased the largest amount, $425 million.