May 19 (Bloomberg) -- Connecticut, home to hedge-fund capital Greenwich, is offering $650 million in general-obligation bonds this week after lower-than-expected collections upended a tax-rebate plan.
Proceeds from the sale, Connecticut’s largest since 2011, will refinance debt, deal documents show. The state has $15.7 billion in general obligations, according to the documents.
The offering is the biggest since a $701 million general-obligation sale that closed in November 2011, according to data compiled by Bloomberg and the state treasurer’s office.
Governor Dannel Malloy, a Democrat up for re-election in November, last month shelved a $155 million plan he announced in January that would have given $55 tax rebates to individuals and $110 to joint filers. At the time, he expected a $505 million budget surplus. The surplus shrank to $43.4 million as of March 31 because of reduced personal income-tax collections, according to bond documents.
Connecticut residents paid 11.9 percent of their income in state and local taxes in fiscal 2011, third behind New York and New Jersey, according to a report last month from the Tax Foundation, a Washington-based research group.
The treasurer’s office doesn’t expect the rebate decision to affect demand for the bonds, according to an e-mailed statement from David Barrett, a spokesman in Hartford.
Nationwide, state revenue last quarter rose less than 1 percent from a year earlier, according to estimates by the Nelson A. Rockefeller Institute of Government in Albany, New York. That was the smallest gain since 2010.
Fitch Ratings grades the new bonds AA, its third-highest rank, saying the wealthiest state in terms of personal income per capita has “reduced fiscal flexibility at a time of lingering economic and revenue uncertainty.”
Debt from Connecticut issuers is earning about 4 percent this year, trailing the $3.7 trillion municipal market’s 5.7 percent return, according to Barclays Plc data.
The Nutmeg State joins issuers offering $5.7 billion in bonds this week, up from $4.7 billion last week.
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