(Media release from the Office of Governor Brian Kemp):
On Wednesday, Governor Brian P. Kemp announced the State of Georgia successfully sold $1.097 billion in two different series of general obligation bonds to fund new construction projects and equipment, make repairs and renovations to existing facilities, and purchase and retire outstanding bonds to achieve debt service savings. The Georgia State Financing and Investment Commission – responsible for issuing the state’s bonds – approved the bond sale at its meeting today.
“Thanks to conservative leadership and our decision to safely re-open Georgia’s economy, Georgia has maintained our coveted triple-A bond rating, balanced our budgets, and cut taxes,” said Governor Kemp. “This bond sale allows us to build and update various infrastructure projects, and create good-paying jobs for hardworking Georgians across the state. Due to low interest rates here in the Peach State, we will be saving taxpayers dollars for years to come while also ensuring Georgia continues to lead the nation in economic recovery.”
“We are extremely pleased with the bids we received. These were the result of the State’s strong credit position and prudent financial management, all of which was reflected in the pre-sale interest, the variety and type of accounts participating, and the post-sale follow-through. As we approached the sale date, the bond market was demonstrating a lot of strength, but it proved to be even stronger than we were expecting. One bidder mentioned that they have not seen as great a demand or reception as they saw on our bonds,” said Diana Pope, Director of the Commission’s Financing and Investment Division.
The bond issues were sold on a competitive basis via four different bids with investors showing high demand for Georgia’s triple A rated bonds. The overall true interest rate cost for the bonds was 1.7420%, which was the second lowest ever for an issue of the State’s general obligation bonds. The interest on all the bonds is exempt from Georgia state income taxation for in-state residents and a large portion of the bonds also are exempt from federal income taxes.
Two of the bids were for the 2021A bonds which are exempt from federal income taxes. The state achieved rates of 0.3212% for the five-year bonds; 0.7084% for a small ten-year bonds piece; and 1.7354% for the twenty-year bonds, for a blended rate of 1.7035% for the 2021A tax-exempt bonds. Two of the bids were for the 2021B bonds which are subject to federal income taxes, with those rates at 0.5633% for the five-year bonds and 1.9279% for the twenty-year bonds, for a blended rate of 1.8596% for the federally taxable 2021B bonds.
The largest amount of funding provides $304.7 million for local school systems’ K-12 and state schools projects. The second largest amount of funding provides over $250.9 million for Board of Regents projects for the University System of Georgia. Public safety related agencies will receive almost $156 million for facilities and equipment. The Department of Technical and Adult Education will benefit from $112.9 million for new and renovated facilities. The Department of Transportation will receive $112.5 million for roads, bridges, and rail projects. The Savannah-Georgia Convention Center Authority will receive $90 million for its expansion project in Savannah. A number of other agencies such as public libraries and health related agencies will also funds for improving their facilities and equipment for providing services to their respective constituencies.
Fitch, Moody’s, 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.