Treasurer Lemoine - Maine Bond Sale Strong in Otherwise Choppy Market
June 7, 2006
For Immediate Release
June 7, 2006 Contact: David Lemoine, 207-624-7477
Treasurer Lemoine – Maine Bond Sale Strong in Otherwise Choppy Market
(AUGUSTA)- State Treasurer Dave Lemoine announced a strong showing for Maine’s current $53 million bond sale despite recent volatility in the bond and equity markets. “We were particularly impressed with the participation of Maine investors in this offering.” said Lemoine. “Nearly all of the $40 million tax-exempt bonds were sold to retail investors on the first day of availability, representing a very rare occurrence in the market and an 18% increase over last year’s retail purchase volume,” he added.
The Dow Jones Industrial average rose by 100 points on Thursday before Maine’s bond sale began and fell by 200 points on Monday, in the middle of the three day sale period.
This bond sale raised $53,048,995.80 at a true interest cost of only 4.37% while maintaining the state’s conservative 10 year amortization policy. The sale was for $3 million more than the $50 million anticipated in the State’s budget, but the low borrowing costs will result in budget savings of $185,000.00 in the coming fiscal year. The 4.37% interest rate is less than 1% (0.90%) higher than the 3.47% incurred last year, while the Federal Reserve Rate increased by 2.0% during the same period.
The bond proceeds will be used to repay bond anticipation notes (BANs) issued quarterly since July 2005. BANs are short-term notes issued each quarter and used to fund projects authorized by voters. “Our approach to debt management is to borrow no more than is needed, no sooner than necessary,” said Lemoine.
Maine has $97,138,101.00 remaining in authorized but unissued bonds following this recent issue.