CHICAGO -- Michigan sold $83 million of bonds last week in a deal that officials said was four times oversubscribed and proved that the state's credit remains appealing to investors.
Proceeds from the sale raised money for a new isotope beam facility at Michigan State University.
The bonds are backed by an appropriation payment from the state. The sale was held on April 2 and 3, and produced a true interest cost of 3.49%, according to Michigan Department of Treasury officials.
"The bonds were well-received by investors, highlighting the strength of the state's credit and demand for its obligations in the marketplace," the treasury department said in a press release touting the sale.
The debt was rated Aa3 by Moody's Investors Service based on the state appropriation pledge. The final maturity is 2031. Bonds maturing in 2018 with a 4% coupon saw an interest rate of 1.29%, 35 basis points over the Municipal Market Data's benchmark on top-rate municipals, according to the Thomson Reuters Municipal Market Monitor web site.
Bond maturing in 2024 with a 5% coupon paid a yield of 3.13%, 59 points over the MMD. Bonds maturing in 2029 with a 5% coupon paid 3.72%, 67 points over the MMD, and bonds maturing in 2031 and a 4% coupon paid 4.13%, 91 points over the MMD.
"We are pleased and proud to have assisted with this transaction to fund the community share portion of the project," Treasurer Kevin Clinton said in a press release.
"This project is expected to drive significant economic development."
Proceeds will finance part of a $600 million Facility for Rare Isotope Beams at MSU. Federal dollars will pay for the bulk of the project, which will launch the university's "next stage of its long history of excellence in nuclear physics," according to Mark Haas, vice president for finance at the school.
Citi was the lead manager and BMO Capital Markets and PNC Capital Markets were co-managers. Miller Canfield was bond counsel. Robert W. Baird & Co. Inc. is the state's financial advisor.
