LOS ANGELES - Oregon is planning to sell $68 million of double-A-plus general obligation bonds next week.
Proceeds will finance a variety of capital projects for the Oregon University System, including a student experience center and student residence hall at Oregon State University.
Other projects include renovation of Hoke Hall at Eastern Oregon University, renovation of the College Union at Oregon Institute of Technology, and student building projects at Western Oregon University.
Bank of America Merrill Lynch is the lead underwriter. Orrick, Herrington & Sutcliffe LLP is bond counsel and Piper Jaffray & Co. is financial advisor.
The deal includes $63.8 million of tax-exempt bonds, with maturities in 2015 through 2034, 2039, and 2043, and $4.5 million of taxable bonds, with maturities in 2015 through 2033.
Fitch Ratings affirmed its AA-plus rating and stable outlook, based on the state's strong financial management, which offsets its revenue volatility, as well as its diverse economy.
Oregon's finances are heavily dependent on personal income tax revenues, which have been a volatile revenue source that declined sharply during the recession. However, the state's management has been taking measures as necessary to maintain balance, Fitch said.
Analysts also noted that the burden of the state's net tax-supported debt and unfunded pension obligations is in line with the median for U.S. states, and its other post-employment benefit obligations are small.
Moody's Investors Service affirmed its equivalent Aa1 rating and stable outlook, based on the state's maintenance of moderate reserve levels during the economic downturn and management's maintenance of a balanced budget.
Offsetting these strengths is a higher than average unemployment rate and its volatile revenue structure.
"Oregon's unusually high dependence on personal income taxes poses downside forecast risk, however maintenance of reserves will mitigate that risk," analysts said. "The constitutional 2% kicker on personal income taxes prevents Oregon from fully capturing the revenue boost during periods of economic strength although building up the state's [rainy day fund] is expected to have a positive effect on the state's long-term fiscal health."
The state's 2% "kicker" requires refunds of personal income taxes if collections are 2% or more than the budgeted amount.
Moody's said continued maintenance of a structural budget balance, maintenance of strong general fund reserve levels, and controlling increases in debt levels could move the rating up.
The state is expected to sell the bonds during the week of May 19.
