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Utah is getting ready to issue $635 million in bonds, its first offering since it placed a record $1.25 billion in debt last September.
The planned bond issue, which will be marketed to individual investors Tuesday and offered to institutional investors Wednesday, appears to be hitting the market at an opportune time, said Richard Ellis, Utah's state treasurer.
"Things are looking really good for us," Ellis said. "When we first started working on this in April, it looked like the interest rate would be around 3.25 percent to 3.50 percent. Since then, though, the market has really moved our way."
The state now is anticipating the interest rate will be less than 3 percent or perhaps as low as 2.75 percent.
The lower interest could save Utah taxpayers as much as $3 million a year.
Utah should see strong demand for its bonds, said Matt Dalton, who oversees $650 million in municipal bonds as chief executive of the White Plains, N.Y.-based Belle Haven Investments Inc.
Dalton said Utah is one of only seven top-rated states and as an infrequent issuer, its debt isn't readily available to bond buyers.
"You have the combination of a AAA rating and the fact that there just isn't a ton of supply. So Utah should do really well in this market," Dalton said. "You're not like New York, which is out issuing bonds practically every day."
The bulk of the proceeds from the bond offering — about $580 million or so — will be used to fund the continued renovation of Interstate 15 in Utah County and development of the Mountain View Corridor in Salt Lake County.
A little more than $50 million will go toward the construction of buildings and improvements on several Utah college campuses.
Ellis said for only the second time, Utah will be giving individual retail investors the first crack at buying its bonds.
"That was something we did last fall for the first time and we saw some pretty good demand back then," he said, estimating that some analysts have projected as much as 40 percent of the current issue may be purchased by retail investors before money market, pension funds and other institutional investors get an opportunity to buy.
Ellis said individual investors who are interested in buying some of Utah's bonds need to contact their brokers.
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