Minnesota Management and Budget says it has sold the $462 million in state appropriation bonds it planned to use to finance the new Vikings stadium.
"It's a good day. It's a good day to get the sale done and move on to the building of the stadium," said MMB commissioner Jim Schowalter. "The rates we got were really good because of market conditions. That said, we're probably still paying a little bit higher rates than we would for our typical general obligation bonds."
MMB said the interest rate on the sale was 4.27 percent for the combination of taxable and non-taxable bonds. The money will pay for the state and city's portion of the $1 billion stadium, now under construction in Minneapolis. The Vikings have pledged just over $500 million for the project.
MMB said Public Financial Management, Inc. is the financial adviser and RBC Capital Markets is the senior banker for the sale. The bond sale was delayed from the first week in January by several legal challenges, which were thrown out last week by Minnesota courts.
Here's some questions and answers about the sale today:
Q: The state pledged $348 million and Minneapolis pledged $150 million. Why just $462 million in bonds?
A: Most investors want a 5 percent "face" interest rate. With interest rates lower than that, the state gets some up-front money to make up the difference over the life of the bond. That up-front payment makes up the other $36 million.
Q: How long does the state have to pay the money back?
A: The bonds were sold in a variety of series. The first will mature in about a year and a half. The longest term bonds go out 30 years.
Q: Where does the money come from?
A: The state has pledged $20 million in new corporate taxes plus the proceeds of taxes on new electronic pulltab gambling. The city of Minneapolis will pay back a $150 million share of the state bonds with existing hospitality taxes, currently paying off the Minneapolis Convention Center debt. That debt is set to be paid off by 2020.
Q: When does the state actually get the money from the bonds?
A: State officials say the sale should formally close late this week, and the state will get the money then. MMB says that should be in time to ease the cash crunch feared by stadium builders. The Minnesota Sports Facilities Authority said it might not have enough money without the sale to pay the construction bills and keep work going on the new stadium.