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State Saves Millons in Bond Refinancing

Credit agencies note pension reform positively in rating reports

PROVIDENCE, R.I. - General Treasurer Gina M. Raimondo today announced the state was successful with its first bond offering of 2012. The state saved over $7 million by refinancing $122.9 million in existing debt. As part of the bond issue, the state also restructured $20 million Department of Transportation debt paid from the motor vehicle tax.

"Our strong showing in the bond market this week is an indication that Rhode Island is moving in the right direction," Raimondo said. "This successful refinancing is good for our taxpayers."

The refinancing took debt with interest rates ranging from 4 percent to 5 percent and replaced it with new debt sold at rates below 2.5 percent on average. The existing debt supports infrastructure and clean water projects among other state programs.

The bond issue priced at rates more favorable in comparison to national indices than the state's last issue which sold in August 2011, noted Maureen Gurghigian, Managing Director of FirstSouthwest, the state's financial advisor. "This evidences stronger investor confidence in the state's credit quality and enhanced the state's savings on this refinancing," she added "It is also important to note that this successful offering is proof that investors are recognizing the state's positive work on pension reform."

All three rating agencies affirmed the State's ratings in connection with the sale: Aa2 Moody's, AA Standard & Poor's and AA Fitch. The state's recent pension reform legislation, the Rhode Island Retirement Security Act of 2011, was noted positively in all the rating reports.

In 2011, Rhode Island made a series of important upgrades related to improving the disclosure of its financial information for its bond offerings, including the launch of an investor relations Web portal, a one-stop clearinghouse for many of the state's pertinent financial information.


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