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Bond commission authorizes planning to convert or refund $116.5 million gasoline and fuel tax bonds
Summary
The commission authorized staff to develop financing options for converting or refunding $116.5 million of variable-rate gasoline and fuel tax bonds that are subject to a May 1, 2026 mandatory tender; municipal advisor recommended proceeding now to seek lower-cost options.
The State Bond Commission on Sept. 18 authorized staff to proceed with development of a plan of finance to convert or refund up to $116,500,000 of outstanding gasoline and fuel tax bonds (series 2022A), which are currently variable-rate and hedged with two interest rate swap agreements.
Staff materials said the bonds are in a SOFR index mode in which the state pays 70% of SOFR plus 50 basis points, and that the bonds have a mandatory tender date of May 1, 2026 and are callable Nov. 1. The commission’s municipal advisor, Wendell Gertner, recommended soliciting bank proposals now rather than waiting for the mandatory tender, saying there may be lower-cost options available under current market conditions.
The financing team, if authorized, would include the commission’s municipal advisor, bond counsel (Foley & Judell), and proposals would be solicited from the commission-approved investment banking pool that was established in August 2024. Staff proposed a tentative schedule: release the solicitation immediately after authorization, return to the commission in October to select structure and bank, and seek preliminary resolution authorization in October, with a supplemental resolution and pricing in November and closing after the Nov. 20 meeting.
Speaker de Villier moved approval of the authorization to proceed; Senator Womack seconded. There were no objections and the commission approved the solicitation and planning schedule.
