Public Financial Management Inc. will assist New Jersey in its plan to defease outstanding general obligation debt.

PFM beat out 11 other firms to work with New Jersey on its strategy.

The state has about $1 billion of various GO funds, and officials would like departments and agencies to tap into them. Otherwise, they plan to pay down outstanding GO bonds with unused GO funds.

Returned funds might also be used to meet general-fund expenditures that are connected to taxes or fees, according to New Jersey Treasury Department spokesman Andrew Pratt.

New Jersey had $29.97 billion of outstanding debt, including $2.59 billion of outstanding GO debt, as of June 30. Debt-service costs account for $2.5 billion of the fiscal 2011 budget. Of that $2.5 billion for debt service, $224.7 million will meet GO principal and interest costs. Fiscal 2011 began July 1.

Morgan Stanley on Wednesday priced more than $100 million of retail orders for New Jersey’s $664.5 million GO refinancing sale, according to Jim Petrino, director of the Office for Public Finance. Morgan Stanley will hold institutional pricing today.

The GO restructuring will shift GO debt-service costs into future years. The transaction could lower fiscal 2011 GO debt-service payments by $175 million.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.