Wisconsin returns with more GOs

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Wisconsin takes competitive bids Thursday on $267 million of general obligation bonds in a deal that will wrap up its new money, general purpose borrowing for the year.

The bonds mature from 2021 to 2040 with bonds maturities callable beginning in 2028.

The state typically sells two GO new money issues for general governmental purposes annually. The state sold its last deal in July for $259 million, said capital finance director David Erdman. The state earlier in the fall sold taxable advance refunding GOs.

“The sale at this time simply reflects draws from the state’s Capital Improvement Fund for draws related to such governmental purposes and does not relate to or reflect anything with current interest rates,” Erdman said.

The state could be back with additional refundings depending on rates. It turned to a taxable structure last month to advance refund $285 million of GOs and while that whittled down its refunding authority, Erdman said the state’s Building Commission recently replenished it.

“The state has a couple series of outstanding Build America Bonds from 2009 and 2010 that have a par call option on May 1, 2020,” Erdman said of potential refunding candidates.

The state asked Kroll Bond Rating Agency, Moody’s Investors Service and S&P Global Ratings to rate the deal. Kroll rates the state’s GOs AA-plus with a positive outlook and Moody’s rates them Aa1 with a stable outlook. S&P rates the state AA with a stable outlook.

“The state's Aa1 general obligation rating reflects a well-funded pension system and limited OPEB liability, moderate but steady economic growth, conservatively managed budgets and adequate liquidity. The rating also reflects the state's low fixed costs despite Wisconsin's slightly elevated debt levels, which outweigh the credit challenge of the state's negative unassigned fund balances,” Moody's wrote in its last report.

Kroll revised its outlook to positive over the summer. “The positive outlook reflects the state’s continued fiscal discipline and the resulting improvement in its financial reserves. KBRA expects that state management will continue to act during the fiscal year to maintain budget balance as needed,” Kroll wrote.

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Primary bond market State and local finance State of Wisconsin Wisconsin