News
Bond Rating Agencies Cite Maine’s Strengthening Economy, Improving Fiscal Operations, and Favorable Debt Position as Credit Strengths: Bond Sale Exceptionally Strong
May 29, 2007
(AUGUSTA)- State Treasurer Dave Lemoine confirmed today the favorable results of Maine’s bond sale last week. “Our 2007 sale continued the trend of strong support from Maine investors,” reported Lemoine. “Approximately $46 million of the $47 million of bonds eligible for retail sale were sold to Maine investors.” he added. The remaining bonds were sold to the institutional market.
The bond sale raised proceeds of $61,665,616.05 at a true interest cost blended rate of 4.096%. The total interest cost for the tax-exempt bonds was 3.906% and 5.357% for the taxable bonds, and the total interest payments over the 10-year term of the bonds will be $14,123,850.67 with an average annual debt service cost of $7,516,149.52. The interest costs for tax-exempt bonds were lower than in 2006 and tracked the Money Market Data (MMD) rates more closely than the year before, suggesting an increased relative strength for Maine paper. Similarly, the true interest costs for the taxable portion of the 2007 sale tracked U.S. Treasury rates somewhat more closely than in 2006 and also achieved a lower rate than in the previous year.
The 2007 bonds were available to buyers on May 18 and May 21. Formal closing of the transaction is scheduled for June 4, 2007. The proceeds will be used to repay bond anticipation notes issued and bond-project expenses incurred in the 2007 fiscal year.
Bond rating agencies, Fitch Ratings, Moody’s Investors Service, and Standard and Poor’s, had cited Maine strengthening economy, improving fiscal operations, and favorable debt position as credit strengths in issued reports connected with the sale. Standard and Poor’s upgraded Maine’s general obligation bond rating to AA from AA-minus with a stable outlook, while Fitch and Moody’s maintained their ratings of AA stable and Aa3 stable. “These ratings and their corresponding reports indicate that Maine is not only fiscally sound, but is tackling challenges responsibly. After our bond sale, it is clear that investors are confident that Maine bonds are a sound investment” said Lemoine.
Complete bond rating agency reports can be found at their websites: www.fitchratings.com, www.moodys.com, and www.standardandpoors.com.
