Jan 25 Florida, still weathering a slow economic recovery, is coming to market as soon as next week with a $330.1 million school bonds deal amid concerns about its long-ailing housing market.
The refunding deal, in which an issuer sells lower-yielding debt to replace higher-interest outstanding securities, carries top ratings from Wall Street credit agencies and would rank among the week's larger competitive offering.
Florida finance officials have not fixed a date for the sale but were expected to next week solicit with 18 hours notice bids on the $330.1 million of public education capital outlay (PECO) debt.
"It depends on the market but it looks that way," Carol Bagley of Florida's Division of Bond Finance said on Friday.
On Friday, muni yields climbed sharply in secondary trading along with U.S. Treasury interest rates. The rise may make some planned refunding deals uneconomic.
The PECO issue is backed by Florida's full faith and credit and is rated AAA by Fitch Ratings and AA1 by Moody's Investor Service, according to analysts' reports.
Moody's has a stable outlook on the state and the PECO deal, while Fitch has a negative outlook on Florida's $13.6 billion of full-faith debt and about $1 billion of state appropriations-backed debt.
"The negative outlook reflects Florida's reduced financial flexibility as it emerges very slowly from the recession," Fitch analysts said. "Reserves, while still satisfactory, have been significantly reduced and budget balancing remains challenging."
Both Moody's and Fitch praised the Republican-led state government's financial policies. In addition, they said, Florida still has bright economic prospects but faces near-term drag from unemployment still higher than the U.S. rate of 7.8 percent, reduced personal net worth levels and the lingering weak market in housing.
Florida AAA-rated, 10-year issues on Thursday traded 20 basis points above Municipal Market Data's benchmark reading of comparable top-quality debt. That is four basis points beneath the average of the last three months, MMD data show.