Missouri, a strong but rare issuer, will take competitive bids Wednesday on a $23.4 million refunding of appropriation-backed debt sold through a conduit to cover the state’s share of the University of Missouri-Columbia basketball arena that opened in 2004.
The current refunding deal will be issued through the Missouri Health and Educational Facilities Authority and is expected to achieve about 10% in net present value savings, according to Stacy Neal, director of accounting in the state Office of Administration’s division of accounting.
The project carried a price tag of $75 million with contributions of $35 million from the state, $15 million from the university and $25 million from a donor.
“We are very excited about the savings level,” Neal said.
The bonds are rated one notch lower than Missouri’s triple-A ratings from all three credit agencies due to the risk of appropriation.
The agencies affirmed the state’s rating on $4.6 billion of tax-supported debt. About 17% of that debt is subject to state appropriation.
“The importance of maintaining access to the capital markets provides strong incentive for the state to make these appropriations,” Moody’s Investors Service analysts wrote.
The state’s gold-plated ratings are supported by strong financial performance, conservative fiscal-management controls, budget reserves that provide short-term liquidity, and a modest debt burden.
Challenges include statutory limitations on revenue increases and vulnerability to job losses in the manufacturing sector that could hurt Missouri’s economic recovery.
