CHICAGO — Ohio comes to market Tuesday with $431 million of general obligation bonds after winning a rating-outlook boost from Moody’s Investors Service.
The state took retail orders on the deal Monday before opening it up to institutional buyers.
JPMorgan is the senior manager and Wells Fargo Securities is co-senior. There are 10 additional firms on the underwriting team. Thompson Hine LLP and Haynes & Haynes LLC are bond counsel, and Acacia Financial Group Inc. is financial advisor.
Moody’s on Friday lifted its rating outlook to stable from negative and affirmed its Aa1 rating on the state. Analysts said the move was prompted by Ohio’s improving fiscal position and an expectation that its finances will continue to improve.
“The outlook also reflects the expectation that the state will return to structural balance in 2013 and continue to replenish reserves with surplus revenues,” analysts said in the report on the upcoming deal.
Gov. John Kasich called the ratings action “fantastic news” that affirms the policy decisions he has made since taking office last year. “Today’s announcement marks the first time since February 2007 that all three rating agencies have given Ohio a double-A-plus rating with a stable outlook,” Kasich said. “It’s great to know that these efforts to make Ohio’s economy stronger are getting noticed.”
The state faced an estimated $8 billion shortfall last year as lawmakers crafted the current two-year budget. The final $54 billion spending plan eliminates the shortfall in part by relying on $1.5 billion of one-shot measures. The budget projects a return to structural balance by next year. So far this fiscal year, revenues are 1.6% above estimates and 9.4% higher than the same period in 2011.
“The state’s debt position is moderate, and unfunded pension and [other post-employment benefit] liabilities are affordable compared to other states, enhancing the state’s budget flexibility going forward,” Moody’s said.
Standard & Poor’s and Fitch Ratings both rate the state AA-plus with a stable outlook.
Ohio has $10.1 billion of bond debt, which includes $7.8 billion of GO debt.
Tuesday’s issue is divided into three series: $300 million of new-money higher education GOs, $91.1 million of higher ed GO refunding bonds, and $39.6 million of infrastructure improvement GO refunding bonds.
The Ohio Public Facilities Commission is set to return to the market next week with $56.8 million of special obligation refunding bonds in four series.
The state’s next GO sale is tentatively expected to total $305 million and is set for a competitive pricing in May or June.