State Refinances to Save Money
March 22, 2012
DES MOINES, Iowa - State Treasurer Michael Fitzgerald announced today the refunding of Iowa’s school infrastructure bonds. Iowa issued school infrastructure bonds in 2001 to provide $50 million in grants to help fund the renovation and repair of existing school facilities and the construction of new additions. The bonds will be paid off with proceeds of new bonds issued at a lower interest rate. The refunding transaction, which involved issuing $21 million in bonds at 1.94%, lowered the state’s interest rate by almost 2.5%. “This transaction is a lot like refinancing your house. It will save the State $4.3 million over the next nine years.” stated Fitzgerald. “Iowa’s strong financial position and historically low interest rates made the refunding a great success.”
As part of the process to sell the bonds, Iowa made credit presentations to the three largest rating agencies: Standard and Poor’s, Moody’s and Fitch. In addition to rating the bonds, Iowa’s overall AAA credit rating was affirmed. “Iowa has a great story to tell. Our careful approach to financial management, resilient economy, and low debt burden have helped make us one of only eight states to be rated AAA by all three rating agencies,” Fitzgerald stated.
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