State Treasurer Michael Fitzgerald is pleased to announce a $46.6 million savings for the State. On August 25, 2020, Fitzgerald refinanced a portion of Iowa’s IJOBS bonds. The State sold new bonds and used the proceeds to pay off the bonds that were issued in 2010. “Similar to refinancing your house, refinancing these bonds at a lower rate will save all Iowans money now and in the future,” stated Fitzgerald. “Iowa’s strong financial position and low interest rates made the refinancing a great success.”
IJOBS bonds, paid off with gaming revenues, were originally issued in 2009 and 2010 to provide millions of dollars for state and local infrastructure projects, including grants for community rebuilding after the floods of 2008. The payments on the original bonds cost almost $55 million per year. After a partial cash redemption in 2014 and refinancings in 2016, 2019 and 2020, the cost of debt service has been reduced to less than $45 million per year.
As part of the process to sell the bonds, Iowa made credit presentations to Standard & Poor’s and Moody’s Investor Service. In addition to rating the bonds, Iowa’s overall Triple A credit rating was affirmed. According to the Standard & Poor’s review, the general credit characteristics of the State reflect:
- Good fiscal management and a structurally balanced budget;
- Maintenance of significant rainy day reserves;
- Average income levels, low unemployment and stable economic growth; and
- Low debt burden, low state employee unfunded pension liabilities and a minimal post-employment benefits liability.
“As Iowa’s Treasurer, I’m focused on keeping the money safe. Our careful approach to financial management, a diverse economy and a low debt burden have helped make us one of only twelve states to be rated Triple A by all three major rating agencies,” Fitzgerald stated. “The Triple A rating is the highest a State can achieve and can be compared to an individual having a credit score over 800.”