Magaziner says debt restructuring saves $100M

R.I. GENERAL TREASURER Seth Magaziner said that the recent restructuring of a $175 million general obligation bond will fund economic-development and school-construction initiatives included in the budget.  / PBN FILE PHOTO
R.I. GENERAL TREASURER Seth Magaziner said that the recent restructuring of a $175 million general obligation bond will fund economic-development and school-construction initiatives included in the budget. / PBN FILE PHOTO

PROVIDENCE – R.I. General Treasurer Seth Magaziner said that the recent restructuring of a $175 million general obligation bond will fund economic-development and school-construction initiatives included in the budget.
The refunding transaction, completed this week, maximizes debt service savings over the next two years, yielding $100.2 million in debt service savings for the next two fiscal years, he said.
Restructuring proceeds are approximately $64 million for fiscal year 2016 and $36 million for 2017.
Magaziner called the restructuring transaction “successful.”
“By taking advantage of historically low interest rates, we can invest millions of dollars in initiatives that will put Rhode Islanders back to work and make our state more economically competitive,” he said in a statement.
For example, $20 million of the funds from the restructuring will be used to seed a School Building Authority focused on renovating and modernizing schools.
Another $45 million has been budgeted by the General Assembly and governor to spur job creation and economic development.
“Restructuring our existing debt is a responsible way to generate resources this year and next year to spark a recovery that will put people to work,” Gov. Gina M. Raimondo said. “All of the money will be invested in economic development to stimulate growth, including an initiative to catalyze innovative opportunities on the I-195 land, a small business assistance program, and construction funds for affordable housing and schools.”
Because of demand for the state’s bond and low rates in the tax-exempt bond market, the average rate paid on new bonds will be 2.4 percent, while the average rate on refunded bonds was approximately 5.2 percent.
In addition to funding economic development initiatives and school construction, restructuring will produce net savings of $633,000 to the state.
Three credit rating agencies reviewed and reaffirmed the state’s ratings for this bond issue in advance of the sale. Moody’s Investors Service, Standard & Poor’s and Fitch Ratings reported that Rhode Island’s General Obligation bond ratings will remain rated at Aa2, AA and AA, respectively.

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