Connecticut won investors’ confidence with summer sales of three bond issues totaling some $900 million to fund UConn construction and municipal services. One sale involved a novel interest-cap feature that shields state taxpayers from rising credit rates, the state treasurer says.
Treasure Denise L. Nappier announced Monday that the latest sale Aug. 13 and 14 for $500 million in taxable and tax-exempt general obligation (GO) bonds is set to close Aug. 29. The tax-exempt bonds bear a 3.49 percent interest rate; the taxable bonds, 3.19 percent.
The first sale $223.9 million in bonds for the UConn infrastructure upgrades drew a blended interest cost of 3.39 percent. Those bonds were sold July 16 and closed on July 31.
The second sale, on July 24, was a competitive auction of $200 million in new 20-year GO bonds. The bid team of Barclay’s Capital Inc. and Siebert Branford Shank & Co. offered to pay interest of 3.57 percent.
The latest sale included an innovative structure offered to investors for the first-time ever, Nappier said. Of the $115 million of variable-rate index bonds issued, $60 million were sold with an “embedded cap” — a limit on the total interest rate built into the security and provided by the investor, she said.
Senior underwriter M.R. Beal introduced the new structure, which eliminates the need for an interest rate derivative agreement with a third party for interest rate protection on variable rate bonds, Nappier said.
M.R. Beal oversaw the $400 million tax-exempt portion of the GO debt offering; Loop Capital was senior underwriter on the $100 milllion taxable portion.
Assisting with all the GO bond sales were Hartford law firm Day Pitney LLP and Finn Dixon & Herling LLP as disclosure counsel. Loop Capital also was involved.
Hartford law firm Robinson & Cole LLP and Soeder & Associates, LLC served as tax counsel. Acacia Financial Group, Inc. and A.C. Advisory were the financial advisors.
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