Massachusetts to continue bond-sale flurry

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Massachusetts expects to continue its busy issuance schedule on Wednesday with a competitive issuance of roughly $650 million in Series 2020 new-money, tax-exempt general obligation bonds in three tranches.

Gov. Charlie Baker submitted his $44.6 billion fiscal 2021 budget to lawmakers. (Bloomberg News)

Acacia Financial Group Inc. is lead manager.

The sale will be the first of the calendar year for the commonwealth after a flurry of activity late in 2019. Closing is scheduled for Feb. 26.

According to state Treasurer Deborah Goldberg, Massachusetts issued 13 GO series overall in 2019, which included eight GO new-money series totaling $2.1 billion, including $451 million in taxables. The commonwealth also refunded $1.6 billion through five series last year, which included one $858 million taxable sale.

Deputy treasurer for debt management Sue Perez, speaking on an investor call, said the commonwealth intends to issue a $650 million negotiated sale of tax-exempt fixed-rate new-money bonds in the second quarter. Treasury officials expect a $900 million sale for the third quarter to include a Commonwealth Transportation Fund issuance, with a $500 million sale set for the fourth quarter.

Fitch Ratings rates Massachusetts GOs AA-plus. S&P Global Ratings and Moody’s Investors Service assign AA and Aa1, respectively.

Massachusetts officials expect a favorable response from the capital markets for its recent $310 million deposit into its reserve fund. The commonwealth’s rainy-day balance is now at a record $3.5 billion, fourth-highest among the states, “and is expected to grow further,” Baker told investors.

“The commonwealth has exceptional fiscal resilience, with strong gap-closing capacity stemming from a practice of building solid reserve balances and making revenue and spending changes as needed in response to changing circumstances,” Fitch said in a presale comment.

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC is bond counsel.

Baker submitted his $44.6 billion FY21 budget request to lawmakers, excluding projected transfers to the medical assistance fund. As filed, the new budget represents a 2.3% increase over projected FY20 spending.

State law requires the Senate and House of Representatives pass separate spending bills before a panel of leaders from each chamber work out a compromise plan.

Baker’s plan provides $216.7 million more in funding for the Massachusetts Bay Transportation Authority and other transit organizations. It calls for a $135 million increase alone for the MBTA, which operates Greater Boston mass transit.

The governor, a second-term Republican who works with a solidly Democratic legislature, has already filed an $18 billion transportation bond bill, borrowing against future revenues, with $11 billion earmarked for road and bridge improvements and $7 billion for additional expansion and modernization of transit, commuter rail and bus services.

Language in his budget bill would also overhaul the MBTA's governing structure. It would replace the five-member Fiscal and Management Control Board, which Baker and the legislature created in 2015 and is scheduled to expire in June, with one of seven members that would include his secretary of transportation and five other gubernatorial appointees.

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