The elected Florida Cabinet Tuesday authorized the sale of up to $200 million of new-money bonds for public education capital outlay, as requested by Division of Bond Finance director Ben Watkins.
After hearing a report about the December sale of $60 million of university system improvement bonds at a true interest cost of 6.16%, Cabinet members expressed concern about higher interest rates.
“We’ve experienced both favorable market conditions as well as very unfavorable market conditions the last three months,” Watkins said. “There’s been a period when the market was closed entirely.”
Watkins said his agency strives to sell the state’s bonds only when government entities need money to fund their projects. The university offering had been delayed from last August because of the credit crisis and lack of access to the bond market, he said.
He said a year ago the university bonds would have sold at interest rates between 5% and 5.5%. But Watkins said a window to the bond market opened in December and the offering was sold.
Even though the interest rate was higher, he said the state has experienced very favorable market conditions in the first two weeks in January when rates “improved substantially.”