State saves millions by refinancing to lower rates

RHODE ISLAND saved over $7 million by refinancing $122.9 million in existing debt, General Treasurer Gina M. Raimondo announced Wednesday.
Posted 4/25/12

PROVIDENCE – Rhode Island saved over $7 million by refinancing $122.9 million in existing debt, General Treasurer Gina M. Raimondo announced Wednesday.

The refinancing, which was the state’s first bond sale of 2012, took debt with interest rates ranging from 4 to 5 percent and replaced it with new debt averaging interest rates of 2.5 percent.

As part of the bond issue, the Ocean State also restructured $20 million in 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 in prepared remarks. “This successful refinancing is good for our taxpayers.”

This bond issue priced at rates more favorable in a national comparison than the state’s last bond sale in August 2011, according to a release.

“This evidences stronger investor confidence in the state's credit quality and enhanced the state's savings on this refinancing,” said Maureen Gurghigian, managing director of FirstSouthwest, the state’s financial adviser.

“It is also important to note that this successful offering is proof that investors are recognizing the state's positive work on pension reform,” she added.

The three main national rating agencies – Fitch, Moody’s and Standard & Poor – all affirmed the state’s bond rating in connection with the sale and noted the state’s pension reform legislation positively in the reports.

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