Grossman Announces $41.6m in Savings Through Bond Refunding
Latest Savings Leveraged by Low Rates and Commonwealth’s Outstanding Credit Rating
Treasurer Steven Grossman today announced that a bond refinancing closed by his office today will save the Commonwealth nearly $42 million in finance costs through fiscal 2024. The refunding will result in more than $4 million in savings alone in fiscal 2014.
“These savings not only result from low interest rates, but also from strategic and transparent communications with the investor community and the strong fiscal management that has earned Massachusetts its highest bond rating in history,” said Treasurer Grossman. “Taxpayers are benefiting from our solid fiscal stewardship and Massachusetts’ reputation as a sound investment.”
Refinancing – or refunding – of bonds is typically done at a time when interest rates and market conditions are more favorable than those being paid on outstanding bonds. The $471 million in refinancing was done as part of a larger $671 million transaction in which $200 million in new General Obligation bonds were sold.
Part of that $200 million in new money was the sale of $100 million in tax-exempt “Green Bonds,” which dedicate bond proceeds specifically to capital projects that are environmentally oriented. Massachusetts was the first state in the nation to offer such bonds, and interest in those bonds was high among investors that might not otherwise invest in Massachusetts.
The Green Bond transaction received 154 orders from retail investors and 29 orders from institutional investors. The $100 million in Green Bonds have a maturity date of 2033, while the remaining $100 million in General Obligation bonds mature in 2043.