If you’ve been concerned about the financial condition of the state of Michigan, you’ve got at least one new measure to look at. The State Treasurer says today that Michigan has successfully sold more than $950-million in both Environmental Program and State Building Authority bonds on the financial markets.
State Treasurer Rachael Eubanks made the announcement today, saying that the sales came with strong investor interest as more than $2.17-billion in orders occurred for both bond sales. The state of Michigan’s strong general obligation credit ratings – “Aa1” by Moody’s and “AA” by Fitch – contributed to that demand.
The strong credit ratings enable the state to borrow money at a lower interest rate, which translates to taxpayer savings and reflects the general creditworthiness of the state.
Treasurer Eubanks says, “Institutional and individual investors continue to have confidence in the state of Michigan during the COVID-19 pandemic,” adding, “These recent bond sales show that investors are willing to put their dollars behind our state. The credit rating agencies also displayed confidence in Michigan’s economic and financial health by affirming their credit ratings.”
Environmental Program Bonds
More than 50 institutional and individual investors submitted approximately $1.02 billion in bond orders to purchase $152.8 million in tax-exempt and federally taxable bonds with maturities ranging from 2030 to 2040. The overall true interest cost for the Environmental Program Bonds was 2.29-percent.
The bonds are being issued under the Great Lakes Water Quality and Clean Michigan Initiative Program and will primarily support environmental contamination remediation, water infrastructure, asset management plans, and water quality monitoring in communities across the state.
The Environmental Program Bonds were sold through an underwriting syndicate led by BofA Securities and Siebert Williams Shank & Co. LLC. Working with the Office of the Attorney General, Dykema Gossett PLLC served as bond counsel and BAIRD was municipal advisor for the sale.
State Building Authority Bonds
Institutional and individual investors submitted approximately $2.18 billion in bond orders to purchase $801.86 million in tax-exempt and federally taxable bonds with maturities ranging from 2020 to 2055. The overall true interest cost for the State Building Authority’s bonds was 2.56-percent.
The authority’s bonds were issued to provide long-term financing for eleven capital outlay projects across the state and to refinance all or a portion of four outstanding authority bond issues. The transaction generated $318 million in interest savings which facilitated the cancellation of 14 leases with a maximum annual net lease savings $24.5 million through 2032.
Eubanks says that because the authority’s bonds are an appropriation credit of the state, the rating agencies rated those bonds one notch below the general obligation credit ratings of the state of Michigan. The authority’s bonds are rated “Aa2” by Moody’s and “AA-” by Fitch.
The authority’s bonds were sold through an underwriting syndicate co-led by Jefferies, Wells Fargo Securities and Barclays. Working with Office of the Attorney General and Dickinson Wright PLLC as bond counsel, Miller Canfield Paddock and Stone P.L.C. served as special tax counsel and BAIRD was the municipal advisor for the sale.