BRADENTON, Fla. — Tennessee hopes that historically low interest rates will fuel its high-grade refunding deal this week with far greater savings than the state’s 4% threshold for refinancings.

State officials plan to price $385 million of general obligation refunding bonds with retail sales Tuesday and institutional sales Wednesday.

If the offering had sold early last week, the aggregate present-value savings could have been as high as 7.58%, or $30 million, according to Mary-Margaret Collier, director of the Office of State and Local Finance.

Similar savings are expected this week.

“We take the savings in the year that they are earned,” Collier said. “There is no extension of maturities, no acceleration.”

The negotiated deal, structured with serial maturities from 2016 to 2027, could be upsized or downsized depending on market conditions.

The transaction came together in just about a month after Collier’s agency received four pitches from investment banks suggesting various sizes and structures. The proposals landed on her desk in the same week.

“It tells me … that bankers are hungry,” Collier said, referring to the short period of time the proposals came in. “They are out there working to find deals that work.”

JPMorgan is the book-runner for this week’s sale.

While the state plans to capture as much savings as possible, maturities will be cut if they do not achieve the 4% savings threshold, she said. “We want people to know we aggressively pursue savings when savings are available to us.”

With a low supply of high-quality paper, Collier expects Tennessee’s gilt-edged bonds will be attractive. Retail investors can get more information at,

The bonds are rated triple-A with a stable outlook by Moody’s Investors Service and Fitch Ratings.

Standard & Poor’s assigns a rating of AA-plus and a positive outlook due to the ongoing rebound of the state’s key tax revenues, including the sales tax that is the main source of funding for the budget.

Tennessee does not have a state income tax.

Analysts from all three rating agencies said the state is fiscally conservative with adequate pension funding and a low debt burden.

The state has around $2 billion of outstanding GO bonds.

Standard & Poor’s analyst John Sugden said the state’s positive economic performance allowed it to build reserves through the beginning of the recession.

“As the economy rebounds, management plans to start rebuilding its reserves in fiscal 2012, and the long-term financial plan in the fiscal 2013 budget proposes to rebuild reserves to more healthy levels while still demonstrating active cost-containment measures,” Sugden said.

If Tennessee is successful in meeting its budget forecast, he said the state’s rating could be upgraded to AAA.

The state is seeing a rise in revenues, though they are still below pre-recession levels.

January revenues were $1.05 billion, which is $37.1 million more than the state budgeted. It’s the sixth-consecutive month of positive growth in the current fiscal year. Tennessee has seen nearly two years of growth in sales tax collections.

Gov. Bill Haslam has proposed a fiscal 2013 budget that would restrain spending below projected revenue growth and rebuild reserves, according to Moody’s analyst Julius Vizner.

The proposed budget adds $50 million to the rainy-day fund, building it up to $356 million.

Public Financial Management Inc. is the state’s financial advisor.

Hawkins Delafield & Wood LLP is bond counsel. Bass, Berry & Sims PLC is counsel to the underwriters.

The sale’s co-managers are Citi, Goldman, Sachs & Co., Morgan Keegan & Co., Piper Jaffray & Co. and Wells Fargo Securities.

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