Oklahoma is seeking to ease budget strains with a nearly $100 million refunding of lease-revenue bonds expected to go to market this week led by senior manager RBC Capital Markets.
The deal includes $86 million of tax-exempt Series A bonds and $11 million of taxable Series B Build America Bonds issued by the Oklahoma Capitol Improvement Authority.
Standard & Poor’s assigned its AA rating and stable outlook on the bonds, while Moody’s Investors Service rates the debt Aa3.
Bond proceeds from Series A will advance refund outstanding Series 2005F bonds, resulting in budgetary savings of $30 million. The refunding will shorten the overall maturity structure by three years for net present-value savings.
The OCIA bond resolution requires payment of the rental amounts needed for debt service, subject to the appropriation of funds. Bondholders have no security interest in the financed facilities, and few legal remedies if the Lgislature fails to make sufficient appropriations to the regents. Because of the appropriation risk, Moody’s rates the lease-appropriation debt one rating notch below the state’s general obligation credit.