In the midst of the COVID-19 pandemic, South Carolina is reaching the market with $ 182.355 million in high-quality, tax-exempt general government bonds. The state will competitively sell the GOs in three separate offers for refunds and new money on Wednesday.
South Carolina GOs have been trading around three basis points above the Refinitiv Municipal Market Data muni 5% AAA scale. On Thursday, the 10-year state GOs were at 0.78% (MMD at 0.75%), while the 30-year GOs were at 1.46% (MMD at 1.43%).
“Certainly, the past 10 months have been very challenging for our state, and I am delighted that South Carolina has managed to maintain our strong credit ratings. We are fortunate that our leadership has adopted fiscal-conservative financial management, which has promoted continued economic growth and supported the increase in our state’s cash reserves, ”said South Carolina treasurer Curtis Loftis.
Prior to the deal, Moody’s Investors Service and Fitch Ratings affirmed Palmetto’s AAA ratings, recognizing the state’s sound financial management amid a global pandemic. S&P Global Ratings affirmed South Carolina’s AA-plus rating. All three rating agencies assign stable rating prospects.
On January 1, more than 308,000 South Carolina residents were diagnosed with COVID-19 and 5,296 died, according to a six-page warning about the economic effects of the pandemic contained in the preliminary official statement.
The team at the State Treasury Office assessed the potential net present value savings of each issue, both in terms of dollar amounts and percentages, as part of the annual review of the state’s existing bond portfolio. He identified several chargeable titles as good candidates for reimbursement, as well as some possibilities for financing higher education.
Divided, sales consist of $ 88.615 million bonds from 2021 A, B, C, D & E GO series state institutions to five colleges and universities, $ 84.655 million from 2021A state economic development reimbursement bonds GO and $ 9.085 million from the 2021 series. Obligations for reimbursement of transport infrastructure in the state of GO.
The Public Resources Advisory Group is the financial advisor, Haynsworth Sinkler Boyd is the securities attorney, Howell Linkous & Nettles is the disclosure attorney and the US Bank is the paying agent.
South Carolina is one of only 14 states ranked in the top category by Moody’s.
“We have resisted the financial impacts of the COVID-19 pandemic better than many states, and these strong credit ratings will allow us to borrow money less cheaply in this age of historically low rates,” said Loftis.
The state last sold comparable GOs on May 2, 2019, when BNY Mellon Capital Markets won $ 9.9 million in bonds from Series 2019A state institutions issued on behalf of Clemson University at real interest cost 2.5182%.
Prior to that, the state was in the competitive arena on August 24, 2017, when it sold $ 121 million in bonds from GO Series 2017A state institutions to Clemson. Morgan Stanley won these titles with an ICT of 2.4450%.
Since 2010, the state has sold more than $ 2 billion in debt, with the largest issue occurring in 2010, when it issued $ 624 million. It wasn’t on the market in 2018 or 2020.
In November 2020, the South Carolina Council of Economic Advisers reduced its revenue estimate for the 2020-2021 state fiscal budget by $ 803.7 million since its February 2020 report, due to the impact of COVID -19. The BEA will review its forecast again next month.
However, the BEA noted that there was resilience in the state’s economy.
“South Carolina is positioned to recover more quickly from the effects of the COVID-19 pandemic than the rest of the nation,” he said. “To date, South Carolina has recovered 70% of COVID-19-related job losses. , but the remaining jobs are expected to return slowly. “