Louisiana to sell $500 mln in bonds; assures on oil spill costs
NEW YORK Feb 7 (Reuters) - New municipal bond issuance is set to fall to around $3.3 billion next week, with the state of Louisiana issuing an assurance on costs related to the 2010 oil spill in the Gulf of Mexico before a planned sale of nearly $500 million of state-backed debt.
Louisiana's sale of general obligation bonds, slated for Tuesday, includes nearly $350 million in tax-exempt bonds and $150 million in taxable bonds. It is expected to be the biggest deal of the week.
The preliminary official statement includes an assurance from the state that it will continue to recoup all costs related to the Deepwater Horizon oil spill in 2010. The cost of the cleanup could reach more than $40 billion.
"The state is continuing to measure these impacts and will seek recovery from BP and the responsible parties," according to the document released Monday.
A year after agreeing to a multibillion dollar settlement with victims of the oil spill, BP, the oil company behind the spill, is aggressively challenging terms of the deal. Altogether, the oil producer has set aside some $42 billion to pay for cleanup and other costs.
The proceeds of the sale are earmarked for uses such as $34 million for economic development, $41 million for general government and nearly $10 million for levees and ports. The biggest portion of the deal is $200 million for "non-state entities," according to an official filing.
Next week's negotiated deals will account for $2.1 billion of the weekly tally and competitive deals are slated to reach $1.2 billion for the week, according to Thomson Reuters calculations estimates on Friday. Last year, the weekly average issuance was $5 billion.
Other larger deals include the New York State Mortgage Agency issuing about $179 million of home mortgage revenue bonds in a deal led by Morgan Stanley.