NJ Covid Bonds (1) Potential Sale

According to the EMMA website New Jersey is planning to borrow up to $6 billion to keep the lights on.

This series will follow the progress of these sales with a lot of information likely available in the Preliminary Official Statements, which were “expected to be available on or about November 6, 2020”, but that was Murphy-downgrade day so changes likely had to be made.

So far all we have are excerpts from the potential sale notices for General Obligation and Transportation Program bonds.

A Resolution was approved on September 22, 2020 authorizing the issuance and sale of one or more series of New Jersey COVID-19 General Obligation Emergency Bonds (the “Bonds”) of the State of New Jersey (the “State”) was adopted by the Treasurer of the State and the Acting Director of the Division of Budget and Accounting in the Department of the Treasury of the State, as Issuing Officials for the Bonds, and approved by the Select Commission on Emergency COVID-19 Borrowing on September 28, 2020. The State expects to price up to $4,500,000,000* of tax-exempt and federally taxable Bonds on or about November 18, 2020. The Bonds are authorized pursuant to the New Jersey COVID-19 Emergency Bond Act,L. 2020, c. 60 (the “Act”). The Bonds, if and when issued, shall be a direct and general obligation of the State and the faith and credit of the State shall be pledged for the payment of the interest and redemption premium, if any, thereon when due, and for the payment of the principal thereof at maturity or earlier redemption date. Proceeds of the Bonds will be used to: (i) address the State’s financial problems that have arisen as a consequence of the COVID-19 Pandemic by addressing a revenue shortfall in Fiscal Year 2021 caused by the COVID-19 Pandemic; and (ii) pay the costs of issuance of the Bonds.

On October 15, 2020, the New Jersey Transportation Trust Fund Authority (the “Authority”) adopted its Eighth Supplemental Transportation Program Bond Resolution (the “Eighth Supplemental Resolution”) authorizing the issuance and sale of one or more series of Transportation Program Bonds in an aggregate principal amount not exceeding $1,500,000,000. The Eighth Supplemental Resolution was adopted in accordance with, and is supplemental to, the 2012 Transportation Program Bond Resolution adopted by the Authority on October 26, 2012, as amended and supplemented, including as supplemented by the Eighth Supplemental Resolution (collectively, the “Resolution”). In accordance with the Resolution, the Authority expects to sell up to $1,500,000,000∗ of its Transportation Program Bonds, 2020 Series AA (the “2020 Series AA Bonds”) subsequent to the pricing and sale of the State of New Jersey’s COVID-19 General Obligation Emergency Bonds, 2020 Series A and B, and prior to December 31, 2020. It is presently expected that the amortization of the principal of the 2020 Series AA Bonds will occur between June 15, 2035 and June 15, 2050. The proceeds of the sale of the 2020 Series AA Bonds will be used to pay: (i) State Transportation System Costs (as defined in the Resolution) and (ii) the costs of issuance of the 2020 Series AA Bonds.

15 responses to this post.

  1. Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 11, 2020 at 1:26 pm

    According to the EMMA website New Jersey is planning to borrow up to $6 billion to keep the lights on.
    When a state is borrowing money, ESPECIALLY $6 billion, TO COVER EVERY DAY OPERATING EXPENSES, then just stick the fork in it, because they are DONE! Finished. Capute. Over. History. Closed. Bankrupt. Destitute, FAILED 🤬
    .
    But don’t feel bad or singled out, you’re not alone, Krazee KA is just one-step behind you 😎

    Reply

    • Posted by Tough Love on November 11, 2020 at 6:52 pm

      Gov. Murphy won’t be here long enough to watch the materially negative effects of borrowing to pay for Operating costs.

      And he WAY too beholden to the Public Sector Unions to ….. do what’s needed ……..MATERIALLY reduce the ludicrously excessive Public Sector Pensions and Platinum+ healthcare benefits.

      NJ has been digging itself into a deep financial hole for quite some time. This borrowing will only add to the problem.

      Reply

      • Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 11, 2020 at 9:14 pm

        NJ ALL states bought by PUBLIC unions have been digging itself into a deep financial hole for quite some time. This borrowing will only add to the problem.
        ALL states where the legislatures are in bed with public employees, basically laundering $$$$. It will crash and burn sooner or later.

        Reply

  2. Posted by MJF on November 11, 2020 at 6:49 pm

    You forgot dumpster fire. Dumb dawg.

    Reply

  3. Posted by PaulB on November 12, 2020 at 11:32 am

    Most people (including the rating agencies) think that GO bonds are safer than other public sector debt. If you look at the CA municipal bankruptcies (Vallejo, San Bernardino, Stockton) from several years ago, you’ll see that holders of that debt got hosed. Notwithstanding the language in the contracts about getting paid before anyone else does, there’s no way that communities will be forced to shut down basic services. Even pensions will be allowed before GO debt obligations are met. Stick to debt that has a lien on specific revenue streams.

    Reply

    • Posted by Rex the Wonder Dog! 🐶🐶🐶🦴🦴🦴 on November 12, 2020 at 1:23 pm

      Most people (including the rating agencies) think that GO bonds are safer than other public sector debt…. Notwithstanding the language in the contracts about getting paid before anyone else does, there’s no way that communities will be forced to shut down basic services. Even pensions will be allowed before GO debt obligations are met.
      Hard to understand what you mean that “pensions will be allowed before GO debt obligations are met”. Are you saying pension will be cut BEFORE general obligation bonds, or the bonds will be cut before pensions? The fact is the STATE of NJ is the party that is *trying* to float these bonds, IF there are any takers. States cannot be brought under federal jurisdiction in a BK court as they are sovereign per the 11th Amendment. And as a sovereign a State can repudiate and default, if they so chose (this has not happened recently) on ANY of their debts and there is not a thing anyone can do about it, because they cannot be sued, 11th Amendment. Chicago and IL BOTH backed out of issuing these same GO bonds recently because NO ONE was willing to buy at the interest rate offered. Now, if a subdivision of a state (City, County) files BK, then the BK court can wipe out any contract and any terms and conditions in any contract, including the order of payment in a BK. The contract is dissolved in a BK court, all of it. So if ANYONE buys a GO bond of a state like NJ, that is so far upside down they will never be able to pay the bond back, then they are idiots. Even at high interest rates, because the default is coming.

      Reply

      • Posted by boscoe on November 12, 2020 at 3:27 pm

        I said it before and I’ll say it again. The state of New Jersey will not default on its G.O. debt. Its budget and its cash flow may be f…ed up for years due to this borrowing, but assuming it can place the bonds, they will be honored for principal and interest. The comparison to municipal defaults in CA or elsewhere is not legit.

        Reply

        • Posted by PaulB on November 12, 2020 at 3:58 pm

          With whose money will they pay principal and debt? Are you assuming they can always retain the investment banking services of Charles Ponzi and Assoc. to raise more money to pay current year’s obligations?

          Reply

  4. Posted by Tough Love on November 12, 2020 at 12:29 pm

    • Beyond denial for these folks. I just don’t get it. And they still have a chance to pretty much have the next 4 years be a simply a push. Stop making moderate Georgia voters who voted for GOP senate regret and change that decision.
      “We found 10 votes that we don’t think should count”. That’s NOT going to give Trump the win. Concede the election and say you’ll try again in 4 years….whether you will or not. At this point, even the GOP can’t wait to swear Biden in in Jan.
      Speaking of concessions, TL, did you catch my mea culpa at the end of the last thread? 🥺

      Reply

    • Posted by NJ2AZ on November 12, 2020 at 2:02 pm

      CNN trashing another news outlet would be funny if it weren’t so sad.

      and to be clear i understand those other outlets are trash, but as i always say that asking someone if they think CNN is an unbiased news source is a good litmus test for partisanship.

      Reply

      • Posted by Tough Love on November 12, 2020 at 8:35 pm

        I’d certainly agree that much of what CNN posts as “news” are really “opinion” pieces.

        But that doesn’t mean that what is stated is not correct …. even if chosen due to bias.

        Reply

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