News
Treasurer Lemoine Reports Results from $133,345,000 June 2009 G.O. Bond Sale
June 1, 2009
Augusta - Maine’s annual sale of general obligation bonds was completed in one day on June 1, 2009, with a total of $133,345,000 bonds being sold at a true interest cost of 2.693342%, reported State Treasurer David Lemoine. The bonds were sold through senior managing underwriter Citigroup Global Markets Inc. with a final maturity of June 1, 2019, in keeping with Maine’s tradition of very conservative maximum of ten-year maturities. The bonds were rated by Moody’s as Aa3 / stable and by S&P as AA / stable.
Over $90 million in retail orders were received during the opening hours of the June 1st offering. Approximately $75 million of the tax-exempt issue ultimately was placed with retail investors. The remaining balance of the tax-exempt issue was sold to institutional investors. The entire taxable issue was sold to institutional investors via sealed bid with interest rates.
A notable aspect of this transaction was the fact that the bonds were sold at a large premium – with the tax-exempt issue generating an original issue premium of $8,467,169. Premiums were employed because of the notably low interest rates and the desire of investors to have higher coupon rates. Although the bonds carry a higher coupon, the State was able to apply the upfront premium to downsize the borrowing and thus keep the overall debt service cost low for the State.
