Gov. Nathan Deal announced today that the state of Georgia successfully sold $235 million in general obligation bonds to fund new construction projects, and repairs and renovations to existing facilities throughout the state. The state also sold two issues of refunding bonds to achieve debt service savings for debt previously issued by the state.
“These rates set new historically low rates, even lower than our sale last June which were record low rates then,” said Deal. “This translates into savings for Georgians. The state’s AAA bond rating enables us to invest in infrastructure around the state in a fiscally responsible manner and to refund outstanding debt to lower debt service payments.”
The state was able to secure record low rates of 2.4023 percent for the new construction 20-year tax-exempt bonds and 0.6173 for the new construction five-year tax-exempt bonds. On Tuesday, the state sold $292.69 million of tax-exempt refunding bonds at a rate of 1.7111 percent, representing a present-value debt service savings of $29.6 million. A smaller issue of $57.05 of taxable refunding bonds was sold at a rate of 0.8533 percent, representing a present value debt service savings of $6.155 million.
The largest amount of funding is to provide an additional $90 million for the Savannah Harbor Deepening Project. Other agencies benefiting from the bond proceeds include $53 million for Technical College System of Georgia projects, $50 million for water and sewer loans to local governments, $17 million for Department of Natural Resources projects at state parks, and several other agencies received a total of $25 million.
The Georgia State Financing and Investment Commission approved the bond sale at its meeting Wednesday. The bond issues were sold on a competitive basis with institutional investors showing solid demand for Georgia's high-grade bonds.
Moody's, Fitch and Standard & Poor's rating agencies assigned their triple-A bond rating with a stable outlook to the state's General Obligation Bonds last week. The rating firms' individual ratings are Aaa, AAA and AAA, respectively. The triple-A ratings reflect the highest rating available and are indicative of the state’s fiscally responsible management.
“Once again earning the top bond ratings during the current economic climate illustrates Georgia’s continued commitment to sound fiscal management,” Deal said.
The Bond Ratings
Moody’s Investors Service reported, “The highest-quality rating is supported by Georgia’s conservative fiscal management, moderate debt burden and relatively well-funded pensions. Budgetary reserves that were largely used up by the end of FY 2010 are slowing being rebuilt. The outlook for the state’s debt … is stable based on our expectation Georgia will take appropriate steps to restore balanced financial operations and replenish reserves as the economy recovers.”
The FitchRatings’ report recognized Georgia’s sound fiscal management practices. “The longstanding ‘AAA’ rating and Stable Outlook on Georgia’s GO bonds reflect its conservative debt management, a proven willingness and ability to support fiscal balance and a diversified economy. The state took repeated action during the last recession to maintain fiscal balance through steep spending cuts, use of federal stimulus, and draws from its rainy day fund, the revenue shortfall reserve. … The state’s debt profile is conservative and its debt burden is moderate as a percentage of personal income, with rapid amortization of principal.”
Standard & Poor’s Rating Services also favorably commented on the state’s fiscal management practices. The report said the ratings reflected the agency’s assessment of the state’s well-diversified economy, history of making difficult decisions to restore fiscal balance, strong financial monitoring and oversight and a gradual replenishing of the revenue shortfall reserve. The rating report noted, “The outlook is stable and reflects Georgia’s ongoing management of its budget to adjust to economic pressures and a slower-than-projected recovery.”