ATLANTA, June 20 -- Gov. Nathan Deal, R-Ga., issued the following news release:
Gov. Nathan Deal announced today that the state of Georgia successfully sold $982.905 million in four different series of general obligation bonds to fund new construction projects and equipment, to make repairs and renovations to existing facilities throughout the state, and to refund outstanding bonds to achieve debt service savings.
"These bonds were sold at very low interest rates given current market conditions and that translates into savings for Georgia's citizens," said Deal. "The state's AAA bond ratings - the highest possible -- enable us to invest in vital infrastructure projects throughout the state in a fiscally responsible manner and to refund outstanding bonds to reduce the debt service payments."
The Georgia State Financing and Investment Commission, which is responsible for issuing the state's bonds, approved the sale of the bonds at its meeting today. All the bonds were sold on a competitive bid basis with investors showing strong demand for Georgia's bonds.
The state secured rates of 0.87 percent for the five-year tax-exempt bonds, 1.78 percent for the 10-year tax-exempt bonds, and 3.03 percent for the 20-year tax-exempt bonds, with a blended rate of 2.90 percent. Some bonds were sold as taxable bonds, with those rates at 1.33 percent for the five-year taxable bonds and 3.49 percent for the 20-year taxable bonds, with a blended rate of 3.35 percent. $13.75 million bonds were sold as taxable Qualified School Construction Bonds - the federal government reimburses the state for the interest paid on those bonds, which brings the effective rate down to zero percent.
The largest amount of funding is to provide $283 million for local school system K-12 and state schools projects. Higher education projects will receive $208 million. These bonds also will fund $153 million for transportation projects, $50 million to make loans to cities and counties for water and sewerage system and reservoir projects, $18 million to fund water supply projects, and others. A complete list of the funded projects is available on the Georgia State Financing and Investment Commission website.
Also, a total of $159.35 million of refunding bonds were issued to refund bonds that were issued in 2004. This refunding will save the state's taxpayers slightly over $16.1 million when comparing the debt service on the refunding bonds versus the original bonds.
Moody's, Fitch and Standard & Poor's rating agencies assigned their 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 and are indicative of the state's fiscally responsible management.
"Once again the state earned the highest possible bond ratings, which illustrates our continued commitment to sound fiscal management while continuing to meet the needs of our citizens for educational services and economic development opportunities throughout Georgia," said Deal.
Excerpts from the Bond Rating Agency Reports
Moody's Investors Service summarized its rationale for the Aaa rating by stating that, "The highest-quality rating is supported by Georgia's conservative fiscal management, replenishment of budgetary reserves that were largely used up during the recession, moderate debt burden and signs of growth (albeit slow) during the current economic recovery. The rating outlook is stable, based on our expectation Georgia will take appropriate steps to maintain balanced financial operations and replenish reserves as the economy recovers."
The FitchRatings' 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. The state took repeated action during the recession to maintain fiscal balance through steep spending cuts, use of federal stimulus, and draws from its rainy day fund, the revenue shortfall reserve (RSR). Since then it has maintained a conservative approach to fiscal management, curbing spending growth and making progress in rebuilding the RSR balance. The state's debt profile is conservative and its debt burden is moderate as a percentage of personal income."
Standard & Poor's Rating Services also favorably commented on the state's fiscal management practices. The report stated that the ratings reflected the agency's assessment of Georgia's "well-diversified economy; strong financial monitoring and oversight with a history of making budget adjustments, mainly through expenditure reductions to restore fiscal balance; revenue shortfall reserve (RSR), which is being gradually replenished and ... provides the state with some financial cushion; and moderate debt levels coupled with rapid amortization of its debt."