A recent $839.8 million special tax obligation transportation bond sale drew historic levels of demand from investors, according to state Treasurer Denise L. Nappier. She termed the sale “succesul,” with demand tripling available bonds.
The bond issuance is the largest in state history and consists of two series. The $700 million 2015 Series A will fund transportation infrastructure improvements statewide, the $139.8 million Series B will refinance existing bonds for savings.
Nappier said the sale demonstrates the attractiveness of Connecticut bonds and serves to reduce the cost of borrowing.
The refinancing via Series B will produce $18.4 million in debt service savings over the next 13 years, Nappier said.
The sale, held Sept. 30 and Oct. 1, included a one-day individual investor retail order period, during which $441.8 million in retail orders was placed. Primarily state residents participated.
The Office of the State Treasurer frequently gives individual investors priority during bond sales, officials said. This marketing is designed to ensure Connecticut citizens have an opportunity to buy bonds that are attractive vehicles to save for retirement, college and other personal financial goals.
Following the retail order period, bonds were offered to institutional investors, and a total of $2.3 billion in orders was placed for the bonds offered.
Because orders far exceeded bonds available, the state was able to reduce interest rates on the bonds in the final pricing. The final overall interest cost on the $700 million, 20-year new money bonds was 3.24 percent.
Proceeds of the bonds will be used to fund transportation infrastructure improvements including the construction, repair and rehabilitation of the state”™s highways and bridges, mass transportation and transit facilities, waterways, maintenance garages and administrative facilities.
Among the specific projects to be funded are improvements to the New Haven Rail Line; the New Haven ”“ Hartford ”“ Springfield rail project; the I-84 Waterbury improvement program; and the I-95 New Haven Harbor Crossing Corridor Improvement Project.
The addition of 1.5 percent of the state”™s sales tax pledged for the Special Tax Obligation bonds, authorized during the 2015 legislative session, and the requirement any revenues credited to the state”™s Special Transportation Fund be expended solely on transportation fixes contributed to the bonds allure, according to feedback from rating agencies and potential investors.
Moody”™s Investors Service, Standard & Poor”™s and Fitch Ratings rated the STO bonds at Aa3, AA, and AA, respectively, all with a stable outlook.
Hartford and New Haven attorneys Updike, Kelly & Spellacy and Lewis & Munday were co-bond counsel for the sale. The underwriting team was led by New York City-based RBC Capital Markets. New York City-based law firm Squire Patton Boggs LLP and the law office of Joseph C. Reid P.A. served as co-underwriters”™ counsel.
The sale is scheduled to close Oct. 15.
