Minnesota Boosts Roads in Largest Sale in Four Years: Muni Deals

Minnesota is offering about $904 million in general-obligation debt tomorrow to raise money for projects from St. Cloud to Winona, in the state’s largest bond sale since 2010.

About $288 million of tax-exempt securities will go toward new highway and bridge projects, such as a span connecting Oak Park Heights to St. Joseph, Wisconsin, said Kevin Gutknecht, a spokesman for the state Transportation Department in St. Paul.

Even if Congress hadn’t replenished the federal fund for highway and mass-transit projects last month, none of the Minnesota projects would have been affected, Gutknecht said by telephone. Although Congress didn’t work out a long-term fix to the program that sends money to states for roads, Minnesota officials will add projects to their pipeline as usual, he said.

“We’re just going to have to play it by ear,” Gutknecht said. “If it’s allowed to go into default, we’ll have to change plans.”

Minnesota is also selling bonds to refinance tax-exempt debt issued for the St. Cloud State University’s Integrated Science and Engineering Laboratory Facility, said Joel Ludwigson, spokesman for the state’s management and budget office in St. Paul.

Exemption Consideration

After the site opened in October, the university said it might want to partner with businesses to conduct research, which would be inconsistent with the bonds’ exemption from taxes, he said by e-mail. The taxable securities would replace the tax-free debt sold for construction, he said.

Moody’s Investors Service ranks the new securities Aa1, second-highest, saying the state’s management “has resulted in improved revenue performance, replenishment of budget reserves and structural budget balance.”

Minnesota sold about $908 million of general obligations in September 2010, according to state data. Its securities are trailing the $3.7 trillion municipal market, earning 5.4 percent this year, compared with the entire market’s 6.7 percent return, according to S&P Dow Jones Indices.

The Land of 10,000 Lakes joins issuers offering $6.9 billion of munis this week, up from $5.8 billion last week.

Before it's here, it's on the Bloomberg Terminal.