CHICAGO — Ohio will enter the market Monday with $300 million of tax-exempt bonds and taxable Build America Bonds to finance higher education capital projects across the state.
The bonds are general obligations of the state and secured by all revenues except lottery income and highway receipts.
The size of the issues may change depending on the market. Ohio budget officials did not return calls seeking comment on the bond sale.
Barclays Capital is the senior manager on the deal, leading eight additional underwriting firms on the deal.
The Ohio Public Facilities Commission is issuing the bonds. Public Financial Management Inc. is the commission’s financial adviser.
The issue is scheduled to include $82.2 million of tax-exempt bonds that mature from 2012 to 2018. Another $217.7 million of BABs mature from 2019 through 2030.
Moody’s Investors Service rates the bonds Aa1 with a negative outlook. Fitch Ratings rates the bonds AA-plus with a stable outlook. Standard & Poor’s maintains a AA-plus rating on the state.
Analysts warned that Ohio has increasingly relied on a number of one-time measures to raise revenues to offset declines. But the state recently has started to enjoy a slight uptick in tax receipts for the first quarter of the fiscal year. Those receipts came in 2.8% above estimates and 6.1% above receipts for the same period last year, according to Moody’s.
Fitch noted that the state’s sale tax has come in 3.5% above estimates and that Ohio expects to receive about $515 million in federal matching Medicaid funds that were not assumed in the biennial budget.
Proceeds from the bond issue will be used for capital projects at state-supported and state-assisted higher education institutions. There are 13 state universities and a number of other smaller colleges that are owned by the state.
The state is preparing for a major administrative shift in January. Republican Governor-elect John Kasich, who beat incumbent Democrat Ted Strickland, tapped Tim Keen to become the director of the Office of Budget and Management, one of the state’s largest debt issuers.
Keen was state budget director under former Gov. Bob Taft, and most recently a senior policy adviser to state auditor Mary Taylor.
Kasich recently told reporters he planned to enact a long-planned income tax cut that Strickland put on hold last year to help fill a $850 million budget shortfall. The 4.2% income tax reduction was the last in a series of tax cuts that totaled 21%.
Republicans will also control both chambers of the Legislature in January after gaining a majority in the House. Lawmakers returned to Columbus last week after a four-month break, but so far the legislative agenda for the two-month lame-duck session is unclear.