Investors Continue to Positively Recognize Pension Reform Legislation
PROVIDENCE, R.I. – Governor Lincoln D. Chafee and General Treasurer Gina M. Raimondo today announced Rhode Island's General Obligation Bond sale this week was a success and demand exceeded expectations. This $81.4 million bond sale priced at the lowest cost-of-capital in Rhode Island history, according to Barclay's, the state's lead underwriter on the sale.
These bonds sold at an interest cost below three percent and are slated to support various transportation, education and open space projects statewide.
"I am pleased that the state has been able to execute this historic bond sale, which is a recognition of our efforts to exercise good fiscal management," Governor Chafee said. "This is part of my Administration's broader strategy to create a climate of predictability, stability, and certainty that gives businesses confidence in Rhode Island."
"With this bond offering, Rhode Island taxpayers experienced the benefits of putting our state pension system on a more stable and predictable path," Treasurer Raimondo said. "This successful financing allows us to invest in our future by borrowing money more cheaply to improve our state's roads, bridges and higher education facilities."
"The feedback we received from investors is that Rhode Island has gone a long way in reducing its overall pension costs and they have greater confidence in the state's ability to meets its obligations going forward," Paul R. Hayley, managing director at Barclays said. "It is definitely a credit positive."
The all-in true interest cost (TIC) of this financing was 97 basis points lower than the new money transaction the state transacted last year (3.92 percent). The longer maturity bonds priced as tight as 52 basis points to the High Grade Municipal Curve, a full 33 basis points tighter than the state's 2011transaction. The transaction was 3.2 times oversubscribed, enabling yields to be lowered during re-pricing by three to four basis points across the curve.
Upwards of 40 institutional investors participated in the transaction with 15 percent of the transaction sold to retail investors with priority given to Rhode Island investors.
This week's successful bond sale is in addition to an April refinancing bond sale where the state saved over $7 million by refinancing $122.9 million in existing debt.
Rhode Island's ratings were re-confirmed for this recent offering at: Moody's Aa2, Standard & Poor's AA and Fitch AA. The Rhode Island Retirement Security Act of 2011, was noted positively in all the rating reports.