PHOENIX — Oregon will sell more than $300 million of general obligation bonds in several tax-exempt and taxable series next week.
The bonds will be priced in a negotiated deal in D, E, F, G, and H series, with the $15 million E series being federally taxable. A little more than $180 million of the bonds are listed as refunding bonds.
Oregon GOs are rated AA-plus by Fitch Ratings and Standard & Poor's, and Aa1 by Moody's Investors Service. Proceeds of the series D and E bonds will finance improvements at various state facilities, while proceeds of the series F and G bonds will refund outstanding bonds. Proceeds of the series H bonds will finance seismic improvements for schools. The bonds are backed by the full faith and credit of the state.
Morgan Stanley and Citi will co-manage the underwriting syndicate, with Hawkins Delafield & Wood as bond counsel and Western Financial Group as financial advisor.
Oregon's general fund is largely fed by personal income taxes, and the state's economy has proven strong during the recovery, analysts said.
"Historical growth in the state's revenues, after adjusting for the estimated impact of tax policy changes, has generally been above inflation over the past 10 years, with robust growth in most years more than compensating for recessionary declines," Fitch said. "Fitch believes this growth trend will continue, supported by employment and wage expansion across the state and across all major industries."
Analysts said that the primary risk to Oregon's credit would be a drawdown of its reserves or a significant drop in personal income tax collections. Oregon Gov. Kate Brown announced last month that the state's unemployment rate of 4.5% is the lowest since records have been kept.
"Oregon's stable outlook reflects the sound governance that improves fiscal stability, and strong economic growth that will support planned increases in reserves," Moody's said. "Oregon's unusually high dependence on personal income taxes poses downside forecast risk, particularly in light of recent stock market volatility, however maintenance of reserves and sustained revenue growth will mitigate that risk."
Oregon "consistently funds its actuarially calculated annual required contributions for the pension system," Fitch noted, and its other post-employment benefits obligations are "modest."