DES MOINES, Iowa – State Treasurer Michael Fitzgerald announced today that the state refinanced a portion of Iowa’s IJOBS bonds. In 2009, Iowa sold bonds to provide millions of dollars for state and local infrastructure projects, including grants for community rebuilding after the floods of 2008. Today’s refinancing transaction, which involved issuing $265 million in bonds at 1.7%, lowered the state’s interest rate by more than 2%. “This transaction is a lot like refinancing your house. It will save the state a total of $36.5 million,” stated Fitzgerald. “Iowa’s strong financial position and historically low interest rates made the refinancing a great success.”
Treasurer Fitzgerald Announces $3 Million in Annual Savings
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 AAA credit rating was affirmed. According to 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.
“Iowa has a great story to tell. Our careful approach to financial management, diverse economy and low debt burden have helped make us one of only eleven states to be rated AAA by all three major rating agencies,” Fitzgerald stated. “Just as having a high individual credit score can help lower your interest rate when you are refinancing your home, the state gets a similar benefit from the AAA rating.”