Miami-Dade County Plans $1.5B of Refundings

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BRADENTON, Fla. — Miami-Dade County this week prices the first of two deals that will bring nearly $1.5 billion of bonds to market within a month.

The first sale, up to $550 million of subordinate special-obligation refunding bonds, is set for retail pricing on Tuesday and institutional sales on Wednesday.

The county also plans to sell up to $910 million of aviation revenue refunding bonds for Miami International Airport just after Thanksgiving.

Low interest rates are making it possible for the county to shed pricey capital appreciation bonds in this week’s offering.

The CABs will be taken out with fixed-rate, current-interest bonds, according to county finance officials.

The deal currently is structured in two series: $197.9 million with serial maturities from 2014 to 2030 and $309.3 million with serial maturities in 2030, 2031 and 2032, as well as term bonds in 2035 and 2037.

The refunding debt is secured by a subordinate lien on a convention development tax, and a backup pledge by Miami-Dade to use local half-cent sales tax revenues to pay debt service, if necessary.

About 80% of the debt being refunded consists of CABs that compound interest, which is paid at maturity. The refunding will eliminate the “balloon risk” for the county associated with future interest payments on the CABs, officials said.

The refunding is expected to achieve an estimated net present-value savings of $42 million or 9% of refunded par.

Good participation in the sale is expected from investors due to limited supply in the municipal bond market as well as Miami-Dade County’s credit strength, according to members of the finance team.

The bonds are rated A-plus by Fitch Ratings and Standard & Poor’s, and A2 by Moody’s Investors Service. All three agencies said the rating outlook is stable. They also affirmed their ratings on about $830 million of bonds that will be outstanding after this week’s sale.

Public Financial Management Inc. is the financial advisor.

Citi is book-runner for the syndicate, which consists of Blalock Robert Van LLC, Cabrera Capital Markets, Estrada Hinojosa & Co., Goldman, Sachs & Co., Loop Capital Markets, M.R. Beal & Co., RBC Capital Markets, Rice Financial, Siebert Brandford Shank & Co., Southwest Securities Inc. and Wells Fargo Securities LLC.

Squire Sanders LLP and D. Seaton and Associates are co-bond counsel. Hunton & Williams LLP and Thomas H. Williams Jr. PL are co-disclosure counsel. Broad and Cassel is underwriters’ counsel.

In the last week of November, Miami-Dade expects to be back in the market to sell up to $910 million of aviation refunding revenue bonds on behalf of Miami International Airport, according to MIA chief financial officer Anne Syrcle Lee.

The airport bonds have been rated A by Fitch and Standard & Poor’s, and A2 by Moody’s. All three have stable outlooks on the debt.

S&P’s rating represents an upgrade from A-minus, and Fitch’s outlook is a revision from negative.

Bank of America Merrill Lynch will be the book-runner for the aviation bond sale.

First Southwest Co. and Frasca & Associates LLC are co-financial advisors.

Hogan Lovells US LLP and Steve E. Bullock PA are co-bond counsel.

Edwards Wildman Palmer LP and Rasco Klock Reininger Perez Esquenazi Vigil & Nieto PL are co-disclosure counsel.

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