The Governor’s Office of Management and Budget announced today that it has selected the financing team for an upcoming $4.5 billion sale of general obligation bonds by the State of Illinois.
The $4.5 billion in bonds will be a negotiated sale and is part of the $6 billion in bonds authorized by the General Assembly earlier this year. In addition to the $4.5 billion sale, the state plans to competitively bid $1.5 billion in general obligation bonds. Both series are expected to go to market in October and close in mid-November. Proceeds of the bonds will be used to pay down a portion of the State’s bills.
Governor Rauner agreed to sell the bonds to provide relief to vendors with unpaid bills, some of whom have carried the state’s debt for over two years. Nearly two-thirds of the bill backlog is accruing late payment interest at the annual statutory rate of up to 12%. The bonds will enable the state to finance the state’s obligations at a more favorable rate.
The following firms will assist with the $4.5 billion negotiated bond sale: joint senior managers: Barclays Capital, Bank of America Merrill Lynch, Citigroup Global Markets, J.P. Morgan Securities, Loop Capital Markets, and Siebert Cisneros Shank & Co. The co-senior managers are RBC Capital Markets, Piper Jaffray & Co., PNC Capital Markets, Ramirez & Co., and Stifel, Nicolaus & Company. The co-managers are Academy Securities, Backstrom McCarley Berry & Co., Blaylock Van, Cabrera Capital Markets, Estrada Hinojosa & Company, George K. Baum & Company, IFS Securities, Mesirow Financial, Mischler Financial Group, Raymond James & Associates, Rice Financial, Stern Brothers, and U.S. Bancorp.
Bond and disclosure counsel is Chapman and Cutler LLP and co-bond counsel are Burke Burns & Pinelli, Ltd. and Charity & Associates, P.C. The state’s financial advisors for the transaction are PFM Financial Advisors LLC and Public Resources Advisory Group.
“The team my office has selected is highly qualified, experienced, diverse, and includes firms in national and regional financial sectors, as well as firms owned by minorities, women and veterans,” said Scott Harry, Director of GOMB.
Additionally the state plans to issue up to $750 million in general obligation bonds in December, 2017 for fiscal year 2018 capital projects through a competitive bidding process.
- Oswego Willy - Friday, Sep 22, 17 @ 3:55 pm:
A Friday News Dump…
…as Rauner tries to undo his destruction?
That’s par for the course I guess.
- Oswego Willy - Friday, Sep 22, 17 @ 3:58 pm:
Most governors wouldn’t have to worry about announcing this on a Friday.
“We’re gonna pay our bills” = Friday Dump.
Very… interesting.
- Arthur Andersen - Friday, Sep 22, 17 @ 4:01 pm:
All the usual suspects!
- Perrid - Friday, Sep 22, 17 @ 4:01 pm:
“Nearly 2/3 of the backlog”, lets assume that’s $10,000,000,000 * 0.033% interest a day comes out to $3,300,000. Best case scenario, $3 million a day, and we have (at best) another month of waiting to do, so $90 million more in interest that will be paid just between now and when the bonds start selling. Very rough math but probably in the ballpark. I just don’t understand why he didn’t get the ball rolling as soon as his veto was overridden.
- Moderate Condor - Friday, Sep 22, 17 @ 4:02 pm:
Congrats to Don Harmon’s firm on getting a cut of the action.
- Small town taxpayer - Friday, Sep 22, 17 @ 4:04 pm:
===The $4.5 billion in bonds will be a negotiated sale===
I wonder why the whole bond sale is not being put out for competitive bid?
- anon - Friday, Sep 22, 17 @ 4:09 pm:
Almost every big bank is on that list, but why is the State not using Goldman Sachs, Jefferies, Morgan Stanley, and Hilltop Securities? They’re all qualified and don’t have a Wells Fargo type scandal in recent memory. Hmm…
- wordslinger - Friday, Sep 22, 17 @ 4:22 pm:
Geez, spreading the pork around on that “negotiated” sale; who isn’t getting a piece?
Twenty six manager firms, three law firms and two financial advisors. Must be an election around the corner.
I’m sure all these folks are going to get invited to many GOP funders. That’s old-school pinstripe patronage. Ain’t no reformin’ goin’ on there.
Want to drive BTIA(TM) crazy? Try to pin them down on EXACTLY why all these parties are needed and what, EXACTLY, are they “negotiating?” They won’t be able to do it.
I guarantee there will be a boilerplate Official Statement will go out and the bonds will sell in 20 minutes.
And everyone of those firms will get a piece of the action for boilerplate work — or no work at all.
- Oh Boy - Friday, Sep 22, 17 @ 4:32 pm:
So cynical, Word.
Don’t you ever get worn out?
Bond houses, bond counsel, bond advisors cannot contribute to campaigns in Illinois. Those firms have been on a list of firms established by GOMB for bond business for two years. They were vetted and approved - and conflicts of interest were eliminated to the best of the Governor’s Office’s ability.
Under Rauner GOMB has sold billions in bonds and there hasn’t been one whisper of anything askew. Because there hasn’t been.
But you keep hunting for scandal.
- wordslinger - Friday, Sep 22, 17 @ 4:42 pm:
–Bond houses, bond counsel, bond advisors cannot contribute to campaigns in Illinois.–
Yeah, I did just fall off the turnip truck. And how’s about their partners and employees? Can’t contribute to candidates, parties or PACS? No bundling allowed?
But you seem to be on top of this. Perhaps you can explain the necessity of 26 managers, three bond counsel and two financial advisors. Or the need for a negotiated deal, at all.
Must be a really complex deal. How so?
- anon - Friday, Sep 22, 17 @ 4:48 pm:
Oh Boy, perhaps you can answer why Goldman Sachs, Jefferies, Morgan Stanley, and Hilltop Securities aren’t on the deal. Why are they in the qualified pool and are the only ones left out?