Rhode Island's $81.4 million general obligation bond sale on Wednesday priced at the lowest cost-of-capital ever for the state, according to General Treasurer Gina Raimondo and lead underwriter Barclays.

Demand exceeded expectations, said Raimondo. The bonds, which sold at an interest cost below 3%, are earmarked for support various transportation, education and open space projects statewide.

The all-in true interest cost was 97 basis points lower than the new money transaction the state transacted last year, at 3.92%. The longer maturity bonds priced as tight as 52 basis points to the high grade municipal curve, a full 33 basis points tighter than the state's 2011 transaction, Raimondo said.

"The feedback we received from investors is that Rhode Island has gone a long way in reducing its overall pension costs and they have greater confidence in the state's ability to meets its obligations," said Paul Hayley, managing director at Barclays. "It is definitely a credit positive."

The transaction was 3.2 times oversubscribed, enabling yields to be lowered during re-pricing by three to four basis points across the curve. More than 40 institutional investors participated in the transaction, with 15% sold to retail investors. Rhode Island investors got priority.

"With this bond offering, Rhode Island taxpayers experienced the benefits of putting our state pension system on a more stable and predictable path," Raimondo said.

Gov. Lincoln Chafee called the outcome "a recognition of our efforts to exercise good financial management."

Rhode Island in April refinanced $123 million in debt. Raimondo said the state saved more than $7 million in that transaction.

The major credit rating agencies affirmed their ratings for the offering. Moody's Investors Service rated the bonds Aa2, while Standard & Poor's and Fitch Ratings assigned double-A. All three cited the landmark 2011 law that overhauled the state's pension system.

Rating agencies and municipal bond analysts also praised Rhode Island for its bondholder priority law and other intercept mechanisms in dealing with distressed communities. They cited the emergence of 19,000-population Central Falls from bankruptcy only 13 months after it filed for Chapter 9 protection.

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