Featured Municipal Bond Issue, Week of September 17th, 2018: State of Colorado Rural Colorado, Certificates of Participation, Series 2018
The State of Colorado is issuing $500 million in Certificates of obligation for the purposes of paying for construction on various transportation projects , other state construction needs and the costs of issuance. According to the official statement, fund proceeds attached to this financing are associated with “high-priority rural State highway and transit projects and rural State capital construction projects at State institutions of higher education that have been delayed due to insufficient funding”. The Series 2018 Certificates are scheduled to be sold by negotiated sale during the week of September 17, 2018. The Certificates are being issued as federally tax-exempt bonds as well as the State of Colorado income tax at the time of sale. However, special tax risks may apply under certain circumstances (see tax matters in the official statement).
Moody’s Investors Service, Inc. and S&P have assigned municipal bond ratings of “Aa2” and AA-, respectively, to the 2018 Bonds.
Principal and interest on the Certificates of Participation are secured by and payable solely from base rent annually appropriated by the state General Assembly or annually allocated by the Transportation Commission, other lease revenues tied to a trust, connected with a site lease on the related projects. More complete information about the COP security and sources of payment on the Certificates is available in the official statement. In particular, the document draws attention to the presence of pending litigation challenging SB 17-267, that if successful, could prompt annual appropriation payments to be suspended or terminated (see Litigation with respect to SB 17-267 and related official statement references) . Details on the purposes, tax-status, security, as well as other matters pertaining to these Certificates can be found in the preliminary official statement, available on MuniOS.
As of the end of July 2018, the state of Colorado had an unadjusted unemployment rate of 3.1%, which is 1% lower than the U.S. rate in July of 4.1%. During the same month, total employment hit a record monthly high for the state.
These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.