DALLAS - Oklahoma officials have named a 10-member syndicate led by Stifel, Nicolaus & Co. to underwrite the final $100 million of general obligation bonds authorized by voters last November.
The state's Legislative and Executive Bond Oversight Commissions on Thursday afternoon approved the negotiated underwriting, which will be sold in July. but decided against offering some of the double-A rated bonds as "college savers."
James C. Joseph, the state's bond adviser, said the commission decided it could obtain lower interest rates through a negotiated sale that targets the Oklahoma retail buyers traditionally lured by the double tax-exempt status of the bonds. The commission believes that most of the bonds will be sold in-state.
"There just didn't seem to be any strong support for offering college savers at this time." Joseph said Friday.
When voters last November authorized $350 million of GO bonds, the approval included a provision to sell up to $100 million in college savers. These zero coupon bonds, which are sold in denominations of as little as $1,000, are aimed at retail investors.
The authorization did not require that any college saver bonds be sold.
Besides St. Louis-based Stifel as bookrunner, the commissions also named Merrill Lynch & Co. and Smith Barney, Harris Upham & Co. as co-sentor managers. The seven co-managers are the Wall Street firms of Dean Witter Reynolds, Lehman Brothers, and Paine-Webber Inc.: Edward D. Jones & Co., a St. Louis brokerage with retail offices in the state; and three Oklahoma City firms, Liberty National Bank & Trust Co., Leo Oppenheim & Co., and T.J. Thompson & Associates.
While the structure of the issue is not final, Joseph said the state will sell serial bonds with a 20-year final maturity, and it is possible that term bonds win be included.
When the state sold $250 million of GOs competitively on March 9, the first such sale for Oklahoma since 1974, the bidding resulted in an aggressive 5.12% true interest cost. Joseph said that under current market conditions he expects an overall interest cost near 5.20% for the new issue.
The cost of issuance will be at or below the $6 per $1,000 of bonds that the competitive deal fetched, Joseph said. He said, however, that the state expects to keep more of the proceeds under the negotiated offering.
In the March 9 sale, the state offered a discount of up to 1% to underwriters and most took it. The discount cost the state about $2.5 million in proceeds, Joseph said.
"This time we expect to get all the proceeds," he said.