HARRISBURG – Pennsylvania today (Tuesday) successfully completed the sale of $300 million in General Obligation bonds, the second-largest competitive bond sale completed nationally in 2009, state Budget Secretary Mary Soderberg said today.
Proceeds from the sale will be used for capital facilities projects. These include construction and major rehabilitation of public buildings for the commonwealth; redevelopment assistance projects funded through the Department of Community and Economic Development; and Department of Transportation bridge projects.
“The market’s strong response during this time of great economic uncertainty reflects both the financial community’s faith in the value of our bonds and the commonwealth’s record of sound fiscal management,” Soderberg said.
“We received bids from five firms, and the interest rates offered were all extremely competitive and characteristic of commonwealth bond sales in recent years,” she said. “This suggests to us that the market is beginning to show signs of recovery, at least as far as the commonwealth is concerned.”
The winning bidder in today’s bond sale was J.P. Morgan Securities, with an interest rate of 4.214 percent. Other bidders were Merrill Lynch & Co.; Barclays Capital Inc.; Citigroup Global Markets and Wachovia Bank N.A.
Today’s issue completes the $600 million commonwealth bond sale approved in November. The first $300 million in this sale was successfully offered in December. That issue was the largest competitive bond sale since the nation’s credit market troubles began in September, Soderberg said.
The commonwealth’s current $300 million deal is the second-largest competitive sale completed in 2009, behind only a $325 million Minnesota issue.
“Our commonwealth’s ability to succeed with a competitive-bid bond sale in this difficult credit environment is further proof of the strength of Pennsylvania’s solid reputation on Wall Street,” Soderberg said.
Prior to the sale, Moody’s Investors Service, Standard & Poor’s Ratings Services and Fitch Ratings all affirmed their double-A rating for the commonwealth’s $8.5 billion outstanding General Obligation bonds. The double-A rating is the second-highest level of credit.
Moody’s noted the following credit strengths of the commonwealth:
-An established record of good financial management, reflected in actions to preserve budget balance in recent years;
-The state’s debt position is moderate and well-controlled, with tax-supported debt ratios close to national average levels and a well-funded state pension system;
-And per capita wealth levels are close to the national average.
The three agencies also assigned the double-A rating to the $300 million in General Obligation bonds that were sold today.