Michigan Agency Sets $535M Bond Sale for June

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CHICAGO — Michigan will issue $535 million of new-money and refunding lease-backed appropriation bonds near the end of June.

The State Building Authority approved the borrowing last week. Citi is the senior manager and Goldman Sachs is the co-senior, a spokesman said. The state has yet to select the full finance team.

The authority, which has roughly $3 billion of outstanding lease-backed debt, is one of Michigan's largest issuers and typically enters the bond market every year or two. It last borrowed in 2011 when it sold $684 million of bonds that were a mix of refunding bonds for savings as part of the state budget and new-money debt for capital projects.

The $535 million of program facilities bonds are set for the week of June 24. It will tentatively include $168 million of new money and $374 million of refunding. Just under $490 million will be tax-exempt with $45 million taxable, according to the state.

Proceeds from the new-money piece will be used to finance capital projects at various state buildings and community colleges across the state, according to the resolution.

The authority is a five-member board appointed by the governor.

Fitch Ratings rates the authority's debt AA-minus, after a recent upgrade from A-plus following Fitch's upgrade of the state's general obligation rating to AA in early April. Standard & Poor's rates the authority's debt A-plus, one notch below the AA-minus general obligation rating because the state legislature needs to annually approve the appropriation of debt-service payments. Moody's Investors Service rates it Aa3, below its Aa2 rating on the state. Both S&P and Moody's revised their outlooks on Michigan to positive from stable in April.

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