Commonwealth Bond Sale Saves Taxpayers an Estimated $23.5 Million
“AAA” Rating on Accelerated Bridge Program Bonds Dramatically Reduces Borrowing Costs
Treasurer Steven Grossman and Secretary of Administration and Finance Jay Gonzalez today announced that the “AAA” rating associated with the state’s Accelerated Bridge Program bond sale has delivered another windfall to taxpayers, saving an estimated $23.5 million in overall borrowing costs.
“We did better than other similarly rated states that recently sold these types of bonds, indicating a high level of confidence among lenders in the financial health of the Commonwealth,” said Treasurer Grossman. “This is further proof that responsible fiscal management translates directly into savings for the taxpayers as we work to fund critical initiatives like the Accelerated Bridge Program.”
“This is yet another positive result of Governor Patrick’s transportation reform legislation that authorized the innovative new financing approach for our Accelerated Bridge Program,” said Secretary of Administration and Finance Jay Gonzalez. “The ‘AAA’ rating for these bonds has meant low borrowing costs and that means millions of dollars of savings for taxpayers.”
JP Morgan was the low bidder in terms of yield, at an average borrowing cost of 3.315%, beating out seven other firms bidding for the highly rated bonds. As a result of the aggressive bids, interest on the bonds will be approximately $23.5 million lower than the Commonwealth had anticipated over the 29-year borrowing cycle associated with the sale.
The “AAA” rating on the bonds is the highest possible designation from Moody’s and Standard and Poor’s, the two agencies that rated the bonds. The first series of bonds associated with the Accelerated Bridge Program, issued in 2010, were also rated “AAA” and were named the municipal market’s “Deal of the Year” by The Bond Buyer newspaper. The award recognized the innovation that went into the development of the bond program.
The Accelerated Bridge Program was authorized in 2008 for the purpose of expediting the repair and reconstruction of hundreds of structurally deficient bridges across the Commonwealth. According to MassDOT, more than 100 bridges have already been repaired as a result of the program, which has been responsible for creating and sustaining more than 14,000 jobs statewide.
Bond proceeds from this latest borrowing will be used primarily to fund the construction and repair of the five largest bridges in the program, including the Longfellow Bridge in Boston; the Route 79/I-195 interchange in Fall River; the Fore River Bridge in Quincy; the Burns Memorial Bridge in Shrewsbury; and the Whittier Bridge in Amesbury and Newburyport.