CHICAGO — Michigan will pay 0.40% in interest for $30 million of two-year taxable general obligation bonds that the state sold in a competitive sale last week.

Wells Fargo submitted the winning bid, according to the state. The deal refunded environmental program bonds originally issued in 2011 at a 0.74% yield.

The state used the proceeds to fund its Great Lakes Water Quality and Clean Michigan Initiative.

It was Michigan's first general obligation borrowing since its largest city, Detroit, filed for bankruptcy in July and spooked the municipal market by treating its GO bonds as unsecured. The spread on the state's tax-exempt bonds is 0.59%, or 20% percent wider than the average, so this year, according to Bloomberg.

"We are very pleased with the results of this transaction," the state's new treasurer, Kevin Clinton, said in a statement released after the sale. "The investor interest in this bond sale not only highlights the state's credit position but demonstrates the continuing demand for Michigan investments. Reducing borrowing costs are an ongoing priority for the state in order to ensure taxpayer dollars are spent as efficiently as possible. Improving the state's financial position and credit rating are a priority because it allows the state to borrow at reduced interest rates."

The bonds were rated AA-minus by Standard & Poor's, AA by Fitch Ratings, and Aa2 by Moody's Investors Service. Standard & Poor's and Moody's have positive outlooks on the state.

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