Morgan Stanley will serve as book-runner on a New Jersey general obligation refinancing deal set to price in the third quarter, beating out 21 other firms for the senior management seat.
Officials are still working to determine the co-managers, syndicate group, and actual deal size, according to James Petrino, director of the Office of Public Finance.
The state is looking to restructure prior debt to lesson debt-service costs in fiscal 2011, which begins July 1. The fiscal 2011 budget proposal anticipates $410 million of debt-service savings, including $175 million from GOs.
New Jersey previously reduced its fiscal 2011 debt-service costs by $208 million, half of its $410 million goal, when it refinanced New Jersey Economic Development Authority school construction bonds on April 22. The state pays down school construction debt through its general fund.
The GO refinancing transaction is subject to market conditions, since New Jersey’s refinancings must include positive net present-value savings, pursuant to the state’s Refunding Bond Act of 1985.
Fitch Ratings and Standard & Poor’s both rate New Jersey AA, while Moody’s Investors Service rates the credit an equivalent Aa2.
Officials are also working on a new-money Transportation Trust Fund Authority deal set to price in the third quarter. The Treasury Department received 47 responses to its request for proposals, with 25 of those firms seeking to price the transaction as book-runner, Petrino said. Responses were due Tuesday.
The TTFA, which helps finance capital improvements for New Jersey’s road, bridges, and mass transit, has $1.6 billion of new-money bonding capacity in fiscal 2011. Like the state, the authority’s fiscal year begins July 1. The agency anticipates selling $1.4 billion of debt in two transactions in fiscal 2011, one in the summer and one in January or February, according to the RFP.
The new-money sale may include a refunding, depending upon market conditions. Moody’s, Standard & Poor’s and Fitch all rate the TTFA’s credit double-A minus.