Nevada to Pay Off Jobless Debt Piled Up in Recession: Muni DealsPriya Anand
Nevada, whose 9.5 percent unemployment rate is the nation’s highest, plans to sell $572 million in bonds this week to repay the federal government for jobless benefits. It’s the state’s biggest sale since 2008.
The borrowing would pay down the $520 million Nevada owes the U.S. for bolstering its unemployment fund after the longest recession since the 1930s pushed the jobless rate to a record 14 percent in 2010. That debt peaked at $846 million in 2012.
Sixteen states and the Virgin Islands collectively owe the federal government $21.3 billion for boosting jobless funds as the national unemployment rate reached a 26-year high of 9.9 percent, Labor Department figures show. Nevada is the eighth-most indebted, with California leading at $9.5 billion.
“What we’ve seen over the last years is what we think is more of a sustainable road to recovery,” Mark Mathers, senior deputy state treasurer, said in an interview from Carson City, Nevada.
States from Michigan to Illinois and Pennsylvania have issued jobless debt in the last two years. The revenue bonds are backed by assessments from employers. Nevada, with a population of 2.8 million, has a taxable wage base of $23 billion to back the bonds.
The securities, which will price tomorrow and mature in five years, received the highest grade of Aaa from Moody’s Investors Service, two steps above the state’s general-obligation rank.
Paying down the debt with the proceeds will save the state about $24 million if current interest rates hold, Mathers said. Five-year benchmark yields were at 1.4 percent as of Oct. 25, the lowest since June 20, according to data compiled by Bloomberg.
The offering is among $5.6 billion of long-term municipal issues scheduled for this week, down from $7.8 billion last week, which was the busiest since July.
Individuals pulled $746 million from muni-focused mutual funds in the week through Oct. 23, according to Lipper US Fund Flows data.