Proceeds from Rhode Island's $175 million general obligation bond refunding will benefit economic development and school construction initiatives, said General Treasurer Seth Magaziner.
"What's different is that the proceeds went toward economic development — things like infrastructure and school construction," Magaziner said in an interview.
The initiatives are part of the $8.6 billion budget Gov. Gina Raimondo signed earlier this month.
The July 21 refunding maximizes debt service savings over two years, according to Magaziner, yielding $64 million in debt service savings in fiscal 2016 and a further $36 million in 2017.
About $20 million of the funds from the restructuring will seed a School Building Authority. The budget also includes $45 million for job creation and economic development, including an initiative to catalyze innovative opportunities on downtown Providence land vacated during the relocation of Interstate 195, a small business assistance program and affordable housing construction funds.
"Restructuring our existing debt is a responsible way to generate resources this year and next year to spark a recovery that will put people to work," said Raimondo, who preceded Magaziner as treasurer.
The average rate paid on new bonds will be 2.4%, according to Magaziner's office, while the average rate on refunded bonds was roughly 5.2%. The restructuring will produce net savings on a present-value basis of $633,000.
All three major bond rating agencies reaffirmed Rhode Island GOs. Moody's Investors Service rates them Aa2. Fitch Ratings and Standard & Poor's each assign AA ratings.