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Florida Boosts Hurricane Fund Debt Sale by 56% to $3.5 Billion

Danielle Moran

(Bloomberg) -- Florida saw such strong demand for the bonds issued for its hurricane catastrophe fund that it boosted the sale by $1.25 billion.

The state up-sized the deal to $3.5 billion from an original amount of $2.25 billion. Taxable 10-year bonds priced at par with a 2.15% coupon, or a 149 basis point spread over Treasuries, in line with what senior manager Bank of America Corp. offered during preliminary pricing.

Ben Watkins, the state’s director of bond finance, did 24 one-on-one calls with investors and had a 104 different buyers participating in the sale, he said in a text message. The reception was “in an entirely different zip code relative to the number of investors participating in prior transactions,” he said.

Watkins said the state sold longer-dated bonds then they had before to take advantage of the flatness of the yield curve and satisfy investor demand. The state sold $1.2 billion of three- and five-year bonds in 2016 when it issued debt for the catastrophe fund. This time, it sold them in lots of five-, seven- and 10-year maturities.

“The hope is to create a loyal following of investors by being completely transparent on the Fund’s finances and operations,” he said. “Better than a home run, it was a grand-slam.”

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