Gov. Nathan Deal announced today that the state of Georgia successfully sold $173 million in general obligation bonds to fund new construction projects and to make repairs and renovations to existing facilities throughout the state.
"These bonds were sold at very low rates given current market conditions and that translates into savings for Georgia's citizens," said Deal. "The state's AAA bond ratings enable us to invest in vital infrastructure around the state in a fiscally responsible manner."
The Georgia State Financing and Investment Commission, which is responsible for issuing the state's bonds, approved the bond sale at its meeting today. The bond issue was sold on a competitive basis with investors showing strong demand for Georgia's highest rated bonds.
The state received competitive bids Wednesday and secured rates of 3.32 percent for the 20 year tax-exempt bonds and 0.82 percent for the five-year tax-exempt bonds, with a blended rate of 3.16 percent.
The largest amount of funding is to provide $54.01 million for Technical College System of Georgia projects throughout the state. The second largest amount is $50 million for the Savannah Harbor deepening project. Projects for the Board of Regents totaled $44.37 million, while State Board of Education projects totaled $17.36 million for local school systems for K-12 school facilities and $1.935 million for state schools. Other agencies that will benefit from proceeds of the bond issue include Vocational Rehabilitation, Public Safety Training Center, Defense, Forestry Commission, and local library systems.
Moody's, Fitch, and Standard & Poor's rating agencies assigned their triple-A bond rating with a stable outlook to the State's General Obligation Bonds last week. The rating firms' individual ratings are Aaa, AAA and AAA, respectively. The triple-A ratings reflect the highest rating available and are indicative of the state's fiscally responsible management.
"Once again the state earned the highest possible bond ratings which illustrates our continued commitment to sound fiscal management while continuing to meet the needs of our citizens for increased educational and economic development opportunities throughout Georgia," said Deal.
The Bond Ratings
Moody's Investors Service summarized their rationale for the Aaa rating by stating that, "The highest-quality rating is supported by Georgia's conservative fiscal management, moderate debt burden and relatively well-funded pensions. Budgetary reserves that were largely used up by the end of [the] recession are now being replenished, and the state is on track to complete a fourth consecutive year of revenue growth. The rating outlook is stable based on our expectation Georgia will take appropriate steps to maintain balanced financial operations and replenish reserves as the economy recovers."
The FitchRatings' report recognized Georgia's sound fiscal management practices. "The longstanding "AAA' rating and Stable Outlook on Georgia's GO bonds reflect its conservative debt management, a proven willingness and ability to support fiscal balance and a diversified economy. The state took repeated action during the recession to maintain fiscal balance through steep spending cuts, use of federal stimulus, and draws from its rainy day fund, the revenue shortfall reserve (RSR). Since then it has maintained a conservative approach to fiscal management, curbing spending growth and making progress in rebuilding the RSR balance. The state's debt profile is conservative and its debt burden is moderate as a percentage of personal income."
Standard & Poor's Rating Services also favorably commented on the state's fiscal management practices. The report stated that the ratings reflected the agency's assessment of Georgia's "well-diversified economy, strong financial monitoring and oversight with a history of making budget adjustments, mainly through expenditure reductions to restore fiscal balance, revenue shortfall reserve, which is being gradually replenished and provides the state with some financial cushion, and moderate debt levels coupled with raid amortization of its debt."