With uncertain conditions continuing to plague the bond market, Florida may venture toward more negotiated deals in the future.
Although the state typically issues bonds competitively, Ben Watkins, director of the Division of Bond Finance, said continued volatility may force him to consider more negotiated sales. He put out a request for proposals to qualify a team of underwriters. Proposals are due by noon on Monday.
“In order to be able to issue bonds if these volatile market conditions persist, we’ll have a qualified team to help us execute the transactions,” Watkins said.
Watkins’ division Tuesday competitively sold a $150 million of public education capital outlay bonds for a true interest cost of 5.41% to Barclays Capital. The full-faith-and-credit bonds are rated AAA by Standard & Poor’s, AA-plus by Fitch Ratings, and Aa1 by Moody’s Investors Service.
While Watkins was happy with Tuesday’s results, he also said some credits may not lend themselves to a competitive sale in this challenging market.
His division is seeking “responses from firms with extensive experience in marketing and selling a broad array of governmental bonds,” according to RFP.
It is anticipated that five large firms, three mid-sized firms, and three small firms will be selected as the underwriting syndicate for state bond issues. One or more firms that distribute bonds primarily through a Web-based platform may also be selected. The highest-ranked firms will be recommended to the governing board of the Bond Finance Division, which is the elected state Cabinet.