Making bond sales more competitive

In a volatile market, an attempt is being made to make bond sales more competitive.

Sponsored by Rep. Alice Hausman (DFL-St. Paul), HF918 would permit the use of either a competitive public sale or a negotiated private sale of the state’s general obligation bonds.

Kathy Kardell, assistant commissioner of Minnesota Management and Budget, said the bill would give the state flexibility to ensure continued access to the municipal bond market under current conditions, which are volatile and uncertain. She added that a private sale would permit the state to implement a program to access retail investors, something that can’t be done with a public sale. Currently only general obligation bonds are required to be sold by public sale.

In January, Minnesota Management and Budget sold $400 million worth of bonds in three competitive sales. The sale would have normally occurred in October, but was deferred because of poor market conditions.

The bill was laid over March 10 for possible inclusion in the House Capital Investment Finance Division omnibus bill. A companion, SF1307, sponsored by Sen. Debbie Johnson (R-Ham Lake), awaits action by the Senate Finance Committee.