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Tennessee Deal Gets 40-Year Low Rates

Tennessee sold $170.5 million of general obligation bonds on Nov. 14 at the lowest overall interest rates in more than 40 years, state officials said.

The offering of $140 million of tax-exempt GOs and $30.5 million of taxable GOs achieved a combined true-interest cost of 2.05%. Proceeds from the tax-exempt bonds will be used to fund new capital projects, while the proceeds from the taxable issue will be used to refinance currently outstanding bonds.

The non-callable refunding bonds were sold as taxable debt because the state had already taken advantage of the one tax-exempt advance refunding that is allowed.

Tennessee achieved present-value savings of $2.6 million over an eight-year period.

“We chose to refinance some of our bonds at this time because interest rates were so low,” said state Comptroller Justin Wilson, who also is secretary of the State Funding Board. “The low interest rates we were able to get demonstrate, once again, that the state is in excellent financial health.”

The bonds are rated triple-A by Fitch Ratings and Moody’s Investors Service, and AA-plus by Standard & Poor’s.

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