CHICAGO – Wisconsin takes competitive bids Tuesday on $260 million of general obligation bonds that feature either five-year or eight-year calls.
The deal should see the state through the next four to six months of capital needs, officials said.
The state discussed the timing with its advisors given that the sale is set for the first day of the Federal Open Market Committee’s monetary policy meeting, during which many believe the group will raise interest rates. The tax-exempt issuance
“Timing was discussed with the market and advisors,” but Wisconsin is not expecting any surprises that would shake the market, said capital finance director David Erdman. The state decided against moving up the deal to last week because it didn’t want to compete with a Mount Pleasant’s borrowing last week tied to the Foxconn technology plant development.
The five-year and eight-year calls are the state’s preference because “it manages the balance and structure of future callable bonds and the loss of advance refundings,” Erdman said.
Erdman said he has $60 million of additional State Building Commission authorized borrowing that would likely be issued using a floating-rate structure.
Also on the horizon, the state is eyeing a refunding of appropriation bonds that have a May 1 optional redemption date, Erdman said.
Ahead of the sale, Fitch Ratings affirmed its AA-plus and stable outlook. Kroll Bond Rating Agency affirmed its AA-plus rating and stable outlook, Moody’s Investors Service affirmed its Aa1 rating and stable outlook, and S&P Global Ratings affirmed its AA rating and stable outlook.
Kroll calls the state’s fully funded pension system “dynamically managed” and a “truly positive outlier on the landscape of municipal finance.”
“We expect that the state will experience moderate economic growth and continue its prudent budget management practices,” Moody’s said of the state’s outlook.
As of the June 2018 update from the Legislative Fiscal Bureau, fiscal 2018 revenues are projected at $41 million higher than forecast while forecast fiscal 2019 revenues are about $18 million lower. Final fiscal 2018 results will be released in October. The fiscal 2019 update excludes the potential positive revenue impact of sales taxes on remote sellers triggered by the U.S. Supreme Court's Wayfair decision which could provide a $90 million benefit this year, Fitch noted.
