Refundings to kick off Massachusetts deal flurry

Register now

Massachusetts will kick off a busy two weeks when it refunds roughly $440 million in taxable bonds and $190 million tax-exempt bonds Monday and Tuesday, respectively.

The commonwealth plans to follow up with a $600 million tax-exempt new-money sale on Sept. 5.

Monday’s negotiated sale of Series D bonds will feature a single-bullet maturity due Sept. 1, 2043, while maturities for Tuesday’s competitive Series E issuance will run from 2020 to 2027.

Officials expect the new-money sale to have both serial and term bonds through 2049.

Fitch Ratings rates the commonwealth’s general obligation bonds AA-plus. Moody’s Investors Service and S&P Global Ratings rate them Aa1 and AA, respectively. All three assign stable outlooks.

Fitch cited its considerable economic resources, strong budget controls and careful financial management. “The commonwealth carries a long-term liability burden that is well above average for a U.S. state but remains a moderate burden on resources,” Fitch said.

Gov. Charlie Baker on July 31 signed a $43.3 billion fiscal 2020 budget — up 3.3% from the previous year — that projects a $476 million net increase to the stabilization, or rainy-day fund.

“The commonwealth is more fiscally sound today than it’s been in over a decade,” Baker said.

Speaking on an investor call Thursday, Baker said $1.7 billion of rainy-day deposits since 2015, including a projected $476 million in the fiscal 2020 spending plan, have raised the balance to a state-record $2.8 billion.

The budget also includes $1.1 billion in unrestricted local aid for cities and towns, up $183 million since fiscal 2015, and a $268 million spike in basic k-through-12 education aid, to $5.2 billion.

Massachusetts’ projected five-year capital program for 2020 through 2024 projects $4.7 billion, with an emphasis on housing, health and human services, higher education and information technology upgrades.

The capital plan includes $60 million to offset climate change, including $21 million for state-owned facilities to reduce greenhouse gas emissions; $12 million to repair and construct inland dams and seawalls; $11 million in grants to cities and towns through the Municipal Vulnerability Preparedness Program; and $5 million for public housing sustainability.

“In Massachusetts, climate change is not a partisan issue,” said Baker, a Republican who works with a heavily Democratic legislature.

A priority for Baker in the upcoming year is the $18 billion transportation bond bill he is sending the legislature. It includes $5.7 billion for the Massachusetts Bay Transportation Authority, which operates Greater Boston mass transit, plus measures aimed at enhancing transit project delivery and relieving congestion.

The commonwealth has already issued nine series of GO bonds in the calendar year, six of which were new money, said Treasurer Deborah Goldberg. They have totaled about $1.3 billion and included a “small amount” of taxables, Goldberg told investors. Massachusetts, she said, has also issued three refundings this year totaling $600 million.

The commonwealth intends to market revenue anticipation notes in September or October, and its Commonwealth Transportation Fund and grant anticipation notes later in the year, according to Sue Perez, deputy treasurer for debt management.

“As you can see, have a busy remainder of 2019 planned for ourselves,” she said.

For reprint and licensing requests for this article, click here.
Sell side State budgets Infrastructure Primary bond market Deborah Goldberg Commonwealth of Massachusetts Massachusetts