State Sells $1.13 Billion in Bonds to Fund TIMED Projects

Treasurer Kennedy Says Bonds Oversubscribed in Every Maturity

BATON ROUGE, LA – The state went to market October 17 to sell $1.13 billion in gasoline and fuels tax bonds to pay for various road and bridge projects in the Transportation Infrastructure Model for Economic Development (TIMED) program, according to State Treasurer John Kennedy.

“We had a tremendous amount of interest in the sale, and we were oversubscribed in every maturity, sometimes as much as eight times,” said Treasurer Kennedy. “In other words, for every $1 in bonds we had to offer, we had as many as eight times the orders.”

The state issued $1.13 billion in 35-year bonds at a true interest cost of 4.753 percent. The state last sold gasoline and fuels tax bonds in 2005 when it issued $525 million in 30-year bonds at a true interest cost of 4.7 percent. Compared to the 2005 TIMED bond sale, the state will be borrowing more money with a longer maturity for essentially the same cost.

“One general guide we use to determine how well we do on a bond sale is to see how we perform against the Municipal Market Data Index,” said Treasurer Kennedy. “During the preliminary sale of TIMED bonds, we initially expected to trade at 22 basis points higher than the MMD, and we ended up with 18 basis points, which was better than our projections.”

Moody’s rated the TIMED bonds Aa3, Standard & Poor’s rated the bonds AA-, and Fitch rated the bonds A+. XL Capital Assurance provided bond insurance for $100 million of the TIMED bonds, FGIC provided insurance for $400 million of the bonds, and FSA provided insurance for $700 million.

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