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Minnesota Authority Sells $37 Mln in Bonds

By Munichain News Desk

Minnesota’s Department of Iron Range Resources and Rehabilitation issued $37.4 million in bonds to finance upgrades in school districts in a region of the state critical to steel manufacturing.

The bonds mature between 2024 and 2043, yielding between 2.65% and 3.72%. They pay interest at 5%. The securities received an enhanced rating of Aa1 from Moody’s Investors Service, which assigned an underlying rating of A1. 

The bonds are secured by taxes on six Minnesota mines that produce taconite, a low-grade iron ore used in steel production. Part of northeast Minnesota near Lake Superior is known as the “iron range” for its concentration of iron-ore mines.

The rating reflects “the very narrow revenue pledge of a residual portion” of Minnesota’s taconite production tax, Moody’s analysts wrote.

The bond proceeds will finance improvements at schools in the state’s so-called Taconite Assistance Area. School districts in the area either count on the assessed valuation of unmined iron ore for more than 40% of total assessed valuation or hosted a taconite facility or power plant before 1977. 

The bonds will fund grants to the 15 school districts in the assistance area and pay for energy efficiency, technology, infrastructure, health, safety, and maintenance improvements, according to the official statement accompanying the sale of the bonds.

The bonds are special limited obligations of the department.

Wells Fargo Bank, NA served as underwriter on the issuance, purchasing the bonds for $42.2 million. PFM Financial Advisors, LLC acted as municipal advisor.

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