Refunding bonds

Treasury Department sales of state and local government series securities are expected to dramatically decline this month now that issuers no longer need them for tax-exempt advance refunding escrows.

The Government Finance Officers Association's federal liaison center is warning some members against using interest rate swaps and derivatives.

With fewer incentives to buy tax-exempt debt under the new tax law, Texas municipal bond industry leaders confront a changing market.

Historically, the vast majority of state and local government series securities were purchased for advanced refunding escrows until tax-exempt advance refundings were banned after 2017.

Chicago’s Sales Tax Securitization Corp. bonds cleared the market after a one-week delay.

First Deputy Mayor Dean Fuleihan put the price tag at $425 million over four years.

State agencies and universities are expected to generate 26% less bond volume this fiscal year, according to the Texas Bond Review Board.

Bond director Ben Watkins lamented the loss of the refinancing tactic that helped refinance 62% of the state’s debt portfolio.

The Railsplitter Tobacco Settlement Authority will price a $679 million current and advance refunding of tobacco bonds.

A portion of the Oklahoma Turnpike Authority's $410 million deal may well be its last advance refunding.

The state increased the size of the deals by 70%, with its bond finance director citing plans by "the clowns in D.C." to outlaw advance refundings.

The California Infrastructure and Economic Development Bank approved $321 million in nonprofit conduit sales this week.

The Central Florida Expressway Authority says its deal pricing Tuesday could be up to $347 million.

Muni issuers rushing to get advance refundings done in December before Congress passes a tax bill that terminates them may face a halt in sales of state and local government securities because of the debt limit.

The state will sell $499 million various purpose GO refunding bonds.

The Central Florida Expressway Authority’s senior bonds won one-notch upgrades from Moody’s Investor Service and S&P Global Ratings.

Halting tax-exempt advance refundings at the end of the year, as proposed by both pending tax bills, would increase issuers’ costs, deprive them of savings for new projects, and push some to enter into swaps that could increase their risk.

As the political gears churn, issuers and borrowers should huddle with legal counsel and financial advisors to consider the possibility of worst-case scenarios in which some or all of the proposed tax reform legislation is enacted.

Mike Duggan won another term in Detroit, and Flint's Karen Walker beat back a recall effort.

The city still plans to refund its outstanding water debt under its own revenue bond credit.