Vermont State Treasurer Beth Pearce Announces Successful Bond Sale

24 May 2021

MONTPELIER, VT — Vermont State Treasurer Beth Pearce today announced that $153.3 million in State General Obligation bonds were successfully sold last week in three separate series, generating proceeds of $183.1 million, including a premium of $29.8 million. The bonds were issued to fund new capital projects and to refinance existing debt with lower interest rates. 

 

The refinancing portion of the transaction saved the taxpayer over $7.6 million in borrowing costs on a net present value basis. Additionally, the Series A new capital projects portion of the bonds raised $98.8 million in proceeds and was issued at an attractive true interest cost of 1.43%, while the true interest costs for the shorter Series B and C refinancing bonds were 0.63% and 0.66%, respectively.

“Investors continue to seek out Vermont bonds as a secure and reliable investment option,” said Treasurer Pearce. “The continued strength of Vermont’s bond offerings enables the State to reduce the cost of borrowing for critically important projects across Vermont. These investments generate economic activity that creates high paying jobs for Vermonters.”

Vermont issued “citizen bonds,” as part of the overall offering, which gave Vermont citizens and retail investors first priority to purchase $39.6 million of bonds, sold on a negotiated basis. Additionally, $113.7 million of new issue, Series A and B General Obligation Bonds were sold by competitive sale on Tuesday April 27th. The State received 12 bids to purchase the bonds, a demonstration of the competitive demand for Vermont bonds.

Funds raised by the bond sale will finance capital projects authorized by the General Assembly, including clean water initiatives, improvements to state buildings, public safety, housing, conservation and recreation projects, and other capital projects.

Vermont General Obligation bonds are rated AA+ by Fitch Ratings as well as S&P Global Ratings, and Aa1 by Moody’s Investors Service, the second highest rating. While the outlook for S&P Global Ratings is negative, it is stable according to Fitch Ratings and Moody’s Investors Service. Vermont has the highest General Obligation bond ratings of any New England state. The ratings reflect Vermont’s strong financial position and history of fiscal discipline. Notwithstanding these strengths, the rating reports also note continued challenges with Vermont’s demographics and workforce issues, as well as long-term liabilities related to pensions and other post-employment benefits (OPEB).  As noted by Treasurer Pearce, “the rating agency reports are clear about the challenges ahead and Vermont must continue to take steps to address these issues so that we can continue to borrow for needed infrastructure at competitive rates.” 

 

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