New Jersey Schedules Record $2.6 Billion Note Sale to Repay Loan
New Jersey plans to sell $2.6 billion in notes this month, its largest-ever short-term debt sale, to repay a loan from Bank of America Merrill Lynch and bolster cash flow, said a spokesman for the state treasurer.
The offer of tax-and-revenue anticipation notes is $450 million more than the $2.15 billion borrowed last fiscal year. It would also be the most since New Jersey sold $2.65 billion in two separate deals under Republican Governor Chris Christie’s predecessor, one-term Democrat Jon Corzine, in fiscal 2006.
“We’re going to do $2.6 billion this year to pay off a $2.1 billion line of credit we’ve already drawn on with Bank of America,” Andy Pratt, a spokesman for Treasurer Andrew Sidamon- Eristoff, said in a telephone interview. “The rest of it will go towards continuing cash-flow needs throughout the year.”
The state took out $1.2 billion from the Bank of America loan in July and $900 million in August, Pratt said.
Revenue for the first three months of the fiscal year that began July 1 missed Christie’s forecast by 4 percent, putting collections about $175 million short of targets in the $31.7 billion budget he signed in June.
The state may face a “significant” reduction of its surplus for fiscal 2012, and this year’s ending balance may be lower because of additional spending or less-than-anticipated revenue, the administration said in offering statements for last month’s $400 million sale of school-construction and refunding debt.
New Jersey is scheduled to sell the notes through competitive bid as soon as Oct. 30, data compiled by Bloomberg show.
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