Florida seeks continued debt reduction with tender offer

Florida continues to work.

Watkins said his division picked 118 CUSIPs for the tender that have limited demand in the secondary market, offering a premium above current trading levels.

Florida has about $500 million to purchase outstanding bonds. Normally 25% to 33% of those offered tenders accept them, Watkins said. If the acceptances exceed $500 million, the state will execute the tenders that save it the most money.

The state is offering to purchase the bonds at 61.3% to 99.8% of par, with most of the offers in the 80% to 90% range. Bondholders who accept the offer will also get accrued and unpaid interest.

J.P. Morgan Securities, BofA Securities and Loop Capital Markets are managing the tender.

Florida posted a notice to the Municipal Securities Rulemaking Board’s EMMA website last week announcing the tender, which has an acceptance deadline of 5 p.m. Eastern Time Oct. 23.

The bonds offered for tender are State Board of Education Public Education Capital Outlay bonds, Series 2016B, 2016C, 2016D, 2016E, 2016F, 2016G, 2017A, 2017B, 2017C, 2018B, 2019C, 2019D, 2020A, and 2021B; Department of Transportation, right-of-way acquisition and bridge construction bonds Series 2016B, 2017A, 2019B, Series 2020A, and Series 2021A; and Department of Transportation turnpike revenue bonds, Series 2019B, 2020B, 2021A, 2021B, and 2021C.

Tenders have become increasingly popular in the past two years. Wisconsin, for example, has executed six tenders since October 2022 mainly to lower debt service, said Aaron Heintz, capital finance director with the Wisconsin Division of Executive Budget and Finance. The transactions have saved the state about $141 million in present value savings, he said.