R.I.’s bond sale successful, demand ‘exceeded expectations’

THE GENERAL OBLIGATION BOND SALE of $81.4 million was successful and demand 'exceeded expectations,' according to Gov. Lincoln D. Chafee and General Treasurer Gina M. Raimondo.
Posted 10/11/12

PROVIDENCE - Rhode Island’s General Obligation Bond sale this week was a success and demand exceeded expectations, according to Gov. Lincoln D. Chafee and General Treasurer Gina M. Raimondo.

The $81.4 million bond sale priced at the lowest cost-of-capital in state history, according to Barclay’s PLC, the lead underwriter on the sale.

The bonds, which are slated to support transportation, education and open space projects across the state, sold at an interest cost below 3 percent.

“With this bond offering, Rhode Island taxpayers experienced the benefits of putting our state pension system on a more stable and predictable path,” Raimondo said in prepared remarks. “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.”

According to a release from Raimondo’s office, upwards of 40 institutional investors participated in the bond sale, with 15 percent of the transaction sold to retail investors. Priority was given to Rhode Island investors.

“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,” Chafee said in a statement. “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.”

This $81.4 million bond sale is in addition to an April refinancing bond sale where the state saved more than $7 million by refinancing $122.9 million in existing debt.

“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 in prepared remarks, adding, “It is definitely a credit positive.”

Rhode Island’s rating was re-confirmed for the bond offering. Moody’s Investor’s Service ranked the state an Aa2, Standard & Poor and Fitch Ratings both ranked it AA. According to Raimondo, the R.I. Retirement Security Act of 2011 was noted positively in all rating reports.

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