State Bond Commission adopts 2025 net state tax-supported debt report; presentation outlines debt positions and rating context

The State Bond Commission on Jan. 16 adopted its annual 2025 net state tax-supported debt report after a presentation by Jessica Munoz, the commission’s state debt officer, who reviewed current debt levels, several issuance scenarios and the state’s credit-rating context.

The report covers debt classified as net state tax-supported debt (NSDSD) and non-NSDSD through Dec. 31, 2024, and projects future fiscal years. Munoz told commissioners Louisiana’s NSDSD debt-service-to-revenue limit — a constitutional cap under which debt service cannot exceed 6% of forecast revenues — stood at about 4.2% for fiscal year 2025 (down slightly from 4.3% in fiscal year 2024). She said one “maximum issuance” scenario would permit up to $795,000,000 within that limit, up from $750,000,000 in the prior report.

Munoz highlighted headline amounts: as of Dec. 31, 2024, total debt classified as NSDSD was reported at $8.6 billion outstanding (about $6.4 billion principal and $2.2 billion interest). Total outstanding debt including non-NSDSD items was reported at about $9.9 billion ($7.5 billion principal and $2.4 billion interest). She said fiscal-year 2024 transactions included seven completed transactions (two refundings that saved $30.9 million) and fiscal 2025 to date had four transactions with three refundings that saved about $89.7 million; additional transactions were planned for the fiscal year.

Munoz described several scenarios the report included: a standard annual general-obligation issuance of $350,000,000; a one-time $552,000,000 issuance to comply with Act 82 (2023) for new cash line-of-credit capacity; and an informational inclusion of a higher-education deferred-maintenance scenario cited as Act 751 of the 2024 regular session. She also said the report now includes additional NSDSD projections and a Moody’s chart showing total long-term liabilities including pension and OPEB.

On credit ratings, Munoz noted S&P upgraded Louisiana in March 2024 from AA- to AA with a stable outlook and that different agencies place Louisiana at different positions on the rating scale. Wendell Gertner, the commission’s adviser on the phone, said the rating agencies will be watching recent tax changes and other fiscal actions and the commission planned meetings with all four major agencies in the coming months.

Representative Bahloff questioned why interest as a share of total debt varied across credits. Munoz and other staff attributed much of the variation to differences in original structure and remaining maturities; she explained that some credits were originally issued with long or back-loaded schedules and that refundings and maturity structures affect the interest-to-principal ratio. Munoz said staff continuously monitor opportunities to refinance and tender bonds to capture interest savings. In the presentation Munoz singled out variable-rate gas-and-fuel bonds of about $421,000,000 that are hedged with interest-rate swaps under the commission’s policy.

Commissioners moved to adopt the report after the presentation and discussion; the adoption motion was seconded and carried with no recorded objection on the transcript.

Ending: The adopted report will be used in upcoming debt planning and credit-agency discussions; staff said they will present the actions taken to rating agencies and continue monitoring refinancing opportunities and future issuance scenarios.