Thanks to the state's continued fiscal discipline and recently reaffirmed AAA credit rating, Missouri taxpayers will save $11.2 million through action taken today to refinance bonds, Gov. Jay Nixon said. The savings will occur through the refinancing of the Special Obligation Refunding Bonds, Series A 2014, which received final approval today from the State Board of Public Buildings.
The refinancing will refund a portion of the outstanding Series A 2006 bonds, originally issued to fund the construction of the Chillicothe Correctional Center. The refinancing will save the state $11.2 million over the life of the bonds, and the debt will be retired in 2031 instead of 2032.
"I have made it a priority since Day One to keep Missouri's budget on a rock-solid foundation of fiscal discipline," Gov. Nixon said. "Today, our continued efforts to maintain our AAA credit rating are once again paying off in the form of lower interest rates and reduced principal, which will save millions for taxpayers."
Ahead of today's refinancing, Standard & Poor's Rating Services reaffirmed Missouri's AAA rating, giving the state a near perfect score for financial management and writing that the "strength of the budget management and government framework has allowed Missouri to maintain reserve and liquidity levels that are consistent with a "AAA' rating."
In also reaffirming, Fitch Ratings assigned Missouri's general obligation bonds a AAA rating, which reflects the state's "low debt burden, historically conservative financial operations, and a broad and diverse economy."
Moody's Investors Service noted that Missouri's rating is based on "its history of excellent financial performance and sound reserve levels, strong fiscal management controls, and the state's moderate debt burden." Moody's added that "executive control over appropriated funds is central to the state's strong fiscal management."
Missouri has been a consistent and responsible issuer of bonds. In July 2013, the state retired the Third State Building Bonds, issued from 1983 to 1987. Missouri's debt per capita is less than half the national average. Since Gov. Nixon took office, Missouri's debt has been dramatically reduced. By Fiscal Year 2018, Missouri will have cut the principal owed nearly in half.