Connecticut on Wednesday sold $250 million in tax-exempt general obligation bonds at an overall interest rate of 2.53%, said state Treasurer Denise Nappier.
She called it a record low for any similar state sale. Bond pricing spreads improved from levels of earlier this year, she added.
Connecticut sold two separate competitive issues totaling $500 million. Morgan Stanley won the $250 million of Series 2016D tax-exempt general obligation bonds with a true interest cost of 2.53%.Morgan Stanley also won the $250 million of Series 2016A taxable GOs with a TIC of 2.12%.
Moody's Investors Service rated both deals Aa3. S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency assigned AA-minus ratings, all three having downgraded the state since May.
"Although our pricing spreads are higher than in past years, we entered the market at an opportune time to capture these very low market rates," said Nappier. "Today's competitive sale, in particular, was well-timed given that the State sustained three rating downgrades since May."
Of the $250 million in tax-exempt funding, roughly $75 million will fund grants-in-aid to towns and school districts; $53 million will fund higher education, technical high schools and magnet schools; $40 million goes to the capital equipment purchase fund; $15 million goes for the local capital improvement fund and $67 million is for various other programs including small business express program, brownfield remediation and economic and capital improvement programs.
About $120 million of the $250 million taxable sale will fund loans to various Connecticut companies for expansion and renovation projects; $47 million will fund the small business express program; $18 million goes to the housing trust fund; $12 million goes for the University of Connecticut technology park; $12 million is for housing projects and $41 million for grants-in-aid to small and minority-owned businesses and other capital programs.
Disclosure counsel are Day Pitney LLP and Soeder & Associates, LLC. Tax counsel are Robinson & Cole LLP and Soeder & Associates, LLC. Financial advisors are Acacia Financial Group Inc. and A.C. Advisory.
