New Hampshire Wednesday plans to issue $150 million of tax-exempt general obligation bonds via competitive bid in the state’s annual new-money sale.
However, officials may decide to offer a $60 million portion of the transaction as taxable Build America Bonds, depending upon market conditions. The deal consists of $90 million of Series 2010B bonds and $60 million of Series 2010C bonds.
Edwards Angell Palmer & Dodge LLP is bond counsel. Public Resources Advisory Group is financial adviser.
New Hampshire had about $625 million of outstanding net general-fund debt as of June 30, according to the preliminary official statement. Fitch Ratings and Standard & Poor’s rate the Series 2010B and Series 2010C bonds AA-plus and AA, respectively. Moody’s Investors Service rates the transaction Aa1.
The Series 2010B bonds will offer serial maturities with $10 million maturing each year from 2012 through 2020, the POS said. The Series 2010C bonds include serial maturities of $6 million annually from 2021 through 2030. That schedule could represent mandatory sinking fund payments if the state offers the Series 2010C bonds as term bonds, the POS said.
The Series 2010B bonds will be tax-exempt since they will help finance the state’s school building aid program. Officials may issue Series 2010C as taxable BABs.
“The Series 2010Bs are funding our school building aid program and because of some of the tax laws around BABs versus tax-exempt, we decided to ensure that all the school building aid grant program dollars are issued tax-exempt,” said state Treasurer Catherine Provencher. “And so the rest of the issue will really be whatever the bidders believe is most advantageous on the day of the sale, whether they be tax-exempt or BABs on the other $60 million.”
New Hampshire typically sells its annual new money in December. This year, officials wanted to quickly follow a July debt restructuring deal that received 18 bids and also issue the new-money bonds competitively since that approach worked well for the July restructuring.
“We decided to sell in this time frame because we just did a refunding four weeks ago,” Provencher said. “So it was decided while everything was fresh — we had just recently met with the rating agencies — we decided to do it all now.”
The July restructuring extended $50 million of debt-service costs due this year to be paid during the next 10 years.
The treasurer said New Hampshire will not issue new money again until fall 2011. She does not see any refinancing opportunities at this time that would generate a net present-value savings for the state.
“We’ve squeaked out just about everything that we could at this point,” Provencher said.
In the past, New Hampshire’s annual new-money issuance ranged from $75 million to $100 million. In fiscal 2009, 2010, and 2011, officials increased that amount to help finance its school building aid program through bond proceeds, rather than pay-as-you go.