June 21-- Gov. Nathan Deal announced today that Georgia successfully sold $600 million in general obligation bonds to fund construction projects, repairs and renovations throughout the state.
The state was able to secure record low rates of 2.69 percent for the tax-exempt bonds and 2.7 percent for the taxable bonds on Thursday. A day earlier, the state refinanced $146.35 million of outstanding debt at a rate of 1.98 percent, representing a present-value savings of $14.4 million.
“These are historically low rates that translate into savings for Georgians,” said Deal. “Leveraging our AAA bond rating, we can continue to invest in infrastructure around the state in a fiscally responsible manner. With this coveted status, Georgia once again has an attractive spot on the map.”
Agencies benefiting from the bond proceeds include $336.6 million for Board of Regents, $21.7 million for Technical College System of Georgia and $60 million for the Ports Authority. Projects range from educational buildings to public safety facilities and include the harbor-deepening project in Savannah.
The Georgia State Financing and Investment Commission approved the bond sale at its meeting today. This week's sale was sold on a competitive basis with institutional investors showing solid demand for Georgia's high-grade bonds.
Moody's, Fitch, and Standard & Poor's assigned the 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 to government issuers and demonstrate what a great value Georgia municipal bonds are to investors.
“Earning the top bond ratings during the current economic climate illustrates Georgia’s commitment to sound fiscal management,” said Deal.
The Bond Ratings
“The highest-quality rating is supported by Georgia’s conservative fiscal management, moderate debt burden and relatively well-funded pensions,” reported Moody’s. “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.”
Fitch’s 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,” said the Fitch report. “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 also reported on the state’s 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 growing revenue shortfall reserve.