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Connecticut Sells $826 Mln in Bonds

By Munichain News Desk

Connecticut issued $826.2 million in bonds to fund statewide capital improvement projects.

The state sold the bonds in three series. The 2024 Series A bonds, consisting of $400 million, mature between 2025 and 2037, yielding between 2.42% and 2.87%. The 2024 Series B bonds, consisting of $250 million, mature between 2037 and 2044, yielding between 2.87% and 3.76%. The 2024 Series C bonds, consisting of $176.2 million, mature between 2025 and 2034, yielding between 2.42% and 2.69%. 

The Series A and Series B bonds are subject to optional redemption in 2034. The securities received a rating of AA- from S&P Global Ratings, Aa3 from Moody’s Investors Service, AA- from Fitch Ratings, and AA+ from Kroll Bond Rating Agency.

The rating reflects Connecticut’s “superior gap-closing capacity, as well as its wealthy and diverse, yet slow-growing, economic profile,” Fitch analysts wrote.

The bond rating also “incorporates the state’s elevated long-term liability burden, carrying costs and expenditure growth trends, most of which are likely to remain comparatively high over time,” according to Fitch. 

The bond proceeds will reimburse school-building projects funded by Connecticut localities, among other projects. 

School construction in Connecticut is financed differently than in many other states. Localities propose and fund their own projects, and then apply for reimbursement from the state. Reimbursement is determined by statutory formula, which the state says contributes to more equitable outcomes.

“The statutory formula generally means that school construction in poorer localities is eligible for a higher rate of State funding than school construction in wealthier localities,” the official statement accompanying the sale of the bonds reads.

Indeed, 99% of the projects on the state’s five-year priority list for such reimbursements fall in municipalities in the bottom two quintiles of per capita income, according to the bond documents.

The bond proceeds will also refund securities the state issued to reimburse school construction in 2014.

The bonds are general obligations of the state, backed by its full faith and credit.

Jefferies LLC served as lead underwriter on the issuance, purchasing the bonds for $927 million. The price reflected a premium of more than $100 million. Acacia Financial Group, Inc, and TKG & Associates LLC acted as municipal advisors.

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