The Pennsylvania Department of Labor & Industry today announced that employers are expected to save up to $100 million dollars in interest payments through the state's sale of unemployment compensation, or UC, bonds.
In addition, Moody's Investor's Service, one of the premier bond rating agencies, has awarded the bonds its highest rating possible, or "Aaa," demonstrating a confidence in Pennsylvania's economic stability.
"As part of the state's comprehensive unemployment compensation reform, these bonds help to ensure a stable and reliable financial future for the commonwealth by saving employers money that they can now invest in the
creation of jobs," said Governor Tom Corbett. "The "Aaa' rating reflects Pennsylvania's large and diverse economic base and the state's history of
strong and consistent funding for the UC program."
Pennsylvania's UC reform law, Act 60, which passed in June, provides for a
bond sale to pay off the debt to the federal government for unemployment
compensation benefits. The administration took the additional and proactive
step of paying off the principal debt through a short-term loan from Citibank.
This saved $18 million to $24 million for Pennsylvania businesses that pay
into the UC fund.
"Governor Corbett's comprehensive approach to reforming the state's UC
system ensures the fund's return to solvency and the long-term availability
of benefits for those who need them," said Labor & Industry Secretary Julia
Hearthway. "The fact that Pennsylvania received the high bond ratings is, in
large part, due to Governor Corbett's responsible economic decisions."
"The ability to offer these bonds with such a high credit rating means
Pennsylvania employers may expect as much as $100 million in interest
savings on the bonds over seven years,'' Hearthway added. "Those savings
can be invested in hiring new employees and expanding their businesses."
The UC bonds are a highly-rated permanent financing that will repay the
Citibank interim financing.
Moody's defines "Aaa" as "of the highest quality, subject to the lowest level
of credit risk." In addition, both Standard & Poor's and Fitch Ratings awarded
the commonwealth with their second highest rating, "AA+."
The Pennsylvania Department of Labor & Industry, the Office of the Budget
and the Pennsylvania Economic Development Financing Authority (PEDFA)
are coordinating the UC revenue bond sale, which is slated to be completed
For more information about the Department of Labor & Industry, visit
For more information about the Department of Economic & Community
Development and PEDFA, visit www.newpa.com.