Tag Archives: bonds

TN bonds sell cheap (2.16%) with credit upgrade

News release from state comptroller’s office
The State of Tennessee has just completed the very successful sale of approximately $366 million of general obligation (GO) bonds. This is Tennessee’s first bond offering since receiving an upgrade of its bond rating to AAA from S&P in May 2016.

Tennessee’s top-rated credit sparked demand from investors while keeping interest rates extremely low.

The debt offering was sold in three series of bonds. The proceeds will be used to fund new capital projects and refinance currently outstanding bonds. The refinancing will save Tennessee taxpayers $22.8 million dollars over the next 15 years.

The combined true interest cost for the bonds was 2.16%. Records indicate that this is the lowest interest cost for a negotiated sale in the state’s history and is a direct result of Tennessee’s highly regarded credit and favorable market conditions.

“It gives me great pleasure to announce yet another history-making Tennessee bond sale,” said Comptroller Justin P. Wilson. “The Tennessee General Assembly and Governor Haslam have worked hard to place Tennessee in an incredibly strong financial position. Tennesseans are benefiting from the lowest interest rates in state history. It’s good to be a triple, triple-A state.”

TN gets AAA bond rating from all three national rating agencies

News release from state comptroller’s office
The State of Tennessee now holds the highest bond ratings issued by all three major credit rating agencies. Tennessee’s triple triple-A status reflects the extremely strong confidence the rating agencies have in the State’s capacity to meet its financial commitments.

The State has been informed that it is now rated AAA by Standard & Poor’s Ratings Services. S&P conducted a mid-year review and upgraded Tennessee’s rating from AA+ to AAA. The other two rating agencies, Moody’s Investors Services and Fitch Ratings, have provided Tennessee with their highest ratings of Aaa and AAA, respectively, since 2010.

S&P’s report cited Tennessee’s strengthening economy, growing reserves, positive year-to-date performance, and continuous sound management of its long-term liabilities.

Tennessee’s preliminary unemployment rate for April 2016 was 4.3%, which is below the U.S. preliminary rate of 5%. Additionally, the Tennessee General Assembly recently appropriated an additional $100 million to the state’s rainy day fund, increasing the fiscal year 2017 balance to $668 million.

These first-class ratings will translate into lower interest rates when the state borrows money, and may result in substantial savings for taxpayers. Continue reading

TN sells $384M in bonds at 2.63 percent interest

News release from state comptroller’s office
The State of Tennessee completed the sale of approximately $384 million of general obligation (GO) bonds today at some of the lowest interest rates in Tennessee history.

Tennessee’s excellent credit stimulated heavy interest from investors, amounting to almost $2 billion in orders. This high demand allowed the state to reprice most of the maturities on its GO bonds 5 to 10 basis points lower than the price that was initially offered, which saves the state millions of dollars over the 20-year life of the bonds.

Tennessee has one of the lowest debt levels of any state, and investors recognize its strong history of balanced budgeting. Investors were willing to pay a $68.5 million up-front premium to acquire Tennessee’s bonds.

The debt offering was sold in two series of bonds, consisting of Series A for $286,275,000 in tax-exempt bonds and Series B for $97,490,000 of tax-exempt refunding bonds. The combined true interest cost of the bonds was 2.63%.

The proceeds of the bonds will be used to fund new capital projects and refinance currently outstanding bonds. The refinancing will save Tennessee taxpayers $8.9 million, or 8.56%, over a 13-year period.

“This bond sale is extraordinary by any measure,” Comptroller Justin P. Wilson said. “The people of Tennessee should take pride in the conservative fiscal approach of the Governor and General Assembly. This historic sale proves that a well-managed state allows taxpayers to save money.”

For this sale Tennessee received triple-A credit ratings from Fitch Ratings and Moody’s Investor Service, and a AA+ rating from Standard & Poor’s.

Bond-raters told TN ‘looking ahead’ to outsourcing

While Gov. Bill Haslam says he has not decided whether to outsource management of more state-owned buildings, a document used this month in presentations to New York bond-rating agencies specifically cites the controversial initiative, reports the Times-Free Press.

In their Oct. 9-10 pitch to Wall Street experts reviewing the state’s financial picture in advance of Tennessee issuing new bonds, the Republican governor and top state officials relied on a 63-page PowerPoint document.

A one-page section called “Looking Ahead” cites two specific initiatives “to reduce costs and improve productivity.”
One is energy management. The other is “Facilities Management Outsourcing.” That’s the proposal now generating a ruckus among state government and higher education workers as well as many Democratic and some Republican legislators.

Haslam spokesman David Smith said Friday the PowerPoint’s mention of outsourcing is not at odds with what Haslam told reporters Wednesday as the administration continues to walk back a confidential timetable.

First reported by Nashville’s WTVF-TV last month, the timetable cited a July 1 date for outsourcing facility management and operations of most state-owned property, including colleges, state parks, prisons and more.

The governor and administration officials are adamant no decision has been made.

“I don’t know how we can say that any more clearly,” Haslam chided reporters last week when they asked about the controversial plan. “We’ve said that 10 times, that it is not decided yet.”
…Asked about the PowerPoint page, Smith said it “is not at variance with what the governor is saying.”

“At these [presentations] one of the questions you’re going to get is, and I’m paraphrasing: ‘You’ve cut expenses, are you out of ideas?'” Smith said in an email. “And these are noted as some of the things we’re looking at as we continually look for ways to reduce costs and increase productivity.”

House Minority Leader Craig Fitzhugh, D-Ripley, was surprised when shown the PowerPoint page.

“It’s pretty clear there,” Fitzhugh said in an interview. “It doesn’t say investigate. It doesn’t say continue to look at it. What’s going on? When you look at that statement in conjunction with everything that seems to be going on I don’t see any indication that it’s just an investigation. It looks like all signs point to all speed ahead.”… Still, Fitzhugh noted, he had made similar rounds of bond-rating firms with former Democratic Gov. Phil Bredesen.

“It’s one of those where you try to put your best foot forward in talking with the bond agencies,” Fitzhugh said. “I guess they thought at least for that purpose that was the thing to do.”

The copy of the state’s presentation provided to the Times Free Press does have a legal disclaimer. It says in part that the information “is dated as of its date and is subject to correction.”

McCormick: TN needs to consider borrowing money to build roads

Speaking to the Hamilton County Pachyderm Club on Monday, House Majority Leader Gerald McCormick said the state should consider taking on new debt to build and maintain roads before a gas tax increase, reports the Times-Free Press.

“We have always paid as we went. Some states issue bonds for these things — I don’t know if we want to do that. I’m not advocating that, but it’s something we need to consider before we go for a big tax increase. And it would not be a penny increase, it would be a very large increase,” McCormick said.

Gov. Bill Haslam said in February he would wait until the next General Assembly session before he proposed legislation to deal with transportation funding.

And using bonds was one of the options listed in a state comptroller’s office report.

Comptroller Justin P. Wilson said early this year his office wasn’t making any recommendations, only suggestions.

“I think there’s an acknowledgment of the issue, and I think it’s widespread in the General Assembly,” Wilson said. “But we have yet to coalesce around a solution.”

Note: On Tuesday, McCormick sent the following to media via email:
House Majority Leader Gerald McCormick (R-Chattanooga) released the following statement to clarify previous remarks regarding transportation infrastructure funding:

“I would like to take the opportunity to clarify my comments made to the Hamilton County Pachyderm Club yesterday regarding Tennessee’s transportation infrastructure. In no way am I advocating for our state to take on debt to fund construction on our roads and bridges. I was simply stating that option might need to be part of a larger conversation to address the problems that we are encountering with the shortfall in funds for transportation projects that impacts all Tennesseans. That being said, I firmly believe that a tax increase should be the absolute last resort and is by no means a foregone conclusion.”

Woman kept for herself bond funds paid on behalf of criminal defendants

A Knoxville woman employed by a bonding company allegedly pocketed bond payments made on behalf of Anderson County criminal defendants who were then freed from jail, reports the News Sentinel. She now faces arraignment on criminal charges herself next week,

A dozen defendants with lengthy rap sheets and charged with crimes ranging from especially aggravated robbery to aggravated assault were released from jail on invalid bonds, officials said.

Relatives of those defendants whose bond payments were allegedly stolen include two grandmothers, two mothers, a girlfriend and two spouses, records show.

Defendant Lena Graves Nail, 41, also allegedly ripped off the Knoxville bonding company that employed her and the insurance firm that underwrote the bonds.

The incidents occurred between July 2011 and September 2012 and involved fraudulent bond papers submitted to the Anderson County Jail by Nail.

“As you might imagine, this presented a crisis for the criminal justice system,” Anderson County District Attorney General Dave Clark said. “Had it gone public, we could have had defendants abscond, knowing there wasn’t a valid bond.”

“We tried to resolve these cases with just outcomes before the defendants knew there wasn’t a valid bond.”

Lakeland citizens seek referendum on $50M bond issue for new school

A group of Lakeland citizens say they’ve succeeded in a petition drive that would call a referendum on the city issuing $50 million in bonds to cover construction of a new school, reports the Commercial Appeal.

Stephanie Lefler, one of the leaders of the petition drive, said Monday “we think we have been successful in gathering enough signatures on a petition to gain a referendum,” and they would present the documents to Lakeland City Recorder Sontidra Thomas.

At least 827 valid signatures are needed to put the issue before voters.

The effort is the latest in an ongoing spirited debate over the feasibility of covering the $50 million in bonds for construction of Lakeland Prep through a 55 cents property tax increase. The school would serve grades 6-12, complementing the suburb’s only current school — Lakeland Elementary.

Like other suburbs in Shelby County, Lakeland’s municipal school district opened for its inaugural term in August. Not long after the opening, there was a push to build a prep school so the city’s children could attend classes from start to finish within the Lakeland School System.

After leaving Lakeland Elementary, students currently go to schools in Arlington and Bartlett.

The Board of Commissioner in October to raise property taxes 55 cents to cover the proposed bond issue, and on Dec. 11 voted 4-0 to issue the bonds.

Bond rating groups fret about decline in TN business taxes

Wall Street’s bond rating agencies expressed concern about Tennessee’s decline in business tax revenue when Gov. Bill Haslam and other top state finance officials delivered their annual updates on state finances Thursday, according to the Commercial Appeal.

“Because that was the cause of our (budget) shortfall, there were quite a bit of questions about that in terms of cause and whether we see a long-term trend there,” Haslam said after meeting with Fitch Ratings Inc., Moody’s Investors Service and Standard & Poor’s Financial Services in New York.

The governor said part of the decline was attributable to business tax over-collections the previous year, along with some large refunds last year. “And second, the fact the businesses are getting a lot more strategic about how and what they pay. We’re trying to do work on our side to make sure we collect what we should. We had that conversation with all three agencies,” he said.

Declines in the collection of the state’s two main business taxes — the franchise tax, on business property; and the excise tax, levied on corporate income — led the governor and state legislature to adjust the state budget that he presented to lawmakers in January downward by $276 million before it was approved in April. The budget went into affect July 1.

State revenue officials are trying to find other causes of the decline. “In Tennessee, we have the sales tax and businesses tax and miscellaneous other taxes. We’re always going to pay a lot of attention to the ebb and flow of those taxes and we’re putting quite a bit of study into understanding how we fell short and what we can or should do about that,” Haslam said.

…In fact, the Tennessee officials didn’t ask for new ratings this year. The state’s general obligations bonds are rated AAA by Fitch and Moody’s and AA+ by S&P. The state sold $190 million of tax-exempt bonds in August at interest rates of 2.99 percent, to fund new construction projects and refinance outstanding bond sold at higher interest rates.

TVA selling $1 billion in bonds

KNOXVILLE, Tenn. (AP) — The Tennessee Valley Authority is offering 10-year power bonds for the first time since 2012.

According to a news release, the utility has priced $1 billion of the new bonds with an interest rate of 2.875 percent.

The bonds mature on Sept. 15, 2024, and are not subject to redemption prior to maturity. Interest is to be paid semi-annually each March 15 and Sept. 15.

TVA is the nation’s largest public utility, serving about 9 million people in parts of seven southeastern states.

TVA receives no funding from taxpayers. It is funded with revenues from power sales and power program financings.

The utility says the proceeds from the bond sale will be used to refinance existing debt or for other power system purposes.

State sells $190M in bonds with low interest rates

News release from state Comptroller’s office:
The State of Tennessee completed the sale of just over $190 million worth of general obligation bonds today at some of the lowest interest rates in Tennessee history.

The debt offering was sold in two series, consisting of Series A for $111,065,000 in tax-exempt bonds and Series B for $79,160,000 of tax-exempt refunding bonds. The combined true interest cost of the bonds is 2.99%.

The bonds will be used to fund new capital projects and refinance currently outstanding bonds. The refinanced bonds will save Tennessee taxpayers $6.9 million over a 16 year period.

Tennessee continues to be a low debt state, and its bonds are very attractive to buyers. For this sale Tennessee received triple-A credit ratings from Fitch Ratings and Moody’s Investor Service, and an AA-plus rating from Standard & Poor’s.

“This is one of the most successful bond sales in state history,” Comptroller Justin P. Wilson said. “Tennessee has a sterling reputation for having one of the lowest debt levels in the nation, and repaying it quickly. Our state legislators and administration should take credit for financial management that eases the burden on future generations of Tennesseans.”