(Crain’s) — In a deal that might be dubbed the “Big Lotto,” Illinois plans to sell another $500 million in tax-exempt bonds this month, the second of two debt offerings planned this year in the range of $500 million to $750 million to repair schools, roads and other infrastructure needs.
Although the latest offering is at the low end of that range, the state ended up selling $800 million in taxable and tax-exempt bonds in January to take advantage of interest rates hovering at historic lows.
The January bond issue was sold in a competitive auction, but the upcoming $500 million bond sale will be managed by New York-based Ramirez & Co. and Minneapolis-based U.S. Bancorp, which were picked at random last year by Illinois Lottery announcer Linda Kollmeyer among the state’s pre-qualified list of 43 potential underwriters.
The municipal bond market continues to be marked by high demand and low supply, making it a favorable time to borrow.
“I don’t think they’re going to have difficulty selling bonds in a few weeks,” said Michael Brooks, senior portfolio manager at Bernstein Global Wealth Management, an investment firm in New York. “The market is desperate for bonds.”
The preliminary prospectus released on March 2 reveals another new wrinkle: Instead of listing expenditures such as health and social services, transportation or education, the state’s new “Budgeting for Results” initiative lists categories of spending such as “enhance the economic well-being of citizens” and “protect the most vulnerable among us.” It also provides much greater detail on revenue sources.