Sept. 12, 2017
State Treasurer Nick Khouri today announced that the state of Michigan successfully sold nearly $120 million in General Obligation Environmental Program bonds.
The sale came with strong investor interest as 16 underwriters submitted competitive bids to purchase $79 million in tax-exempt bonds and 14 underwriters submitted competitive bids to purchase more than $40.5 million in federally taxable bonds.
For the tax-exempt maturities ranging from 2022 to 2027, Goldman Sachs & Co. LLC was the winning underwriter with a 1.70 percent true interest cost bid. For the federally taxable securities ranging from 2020 to 2025, Fifth Third Securities Inc. was the winning underwriter with a 2.11 percent true interest cost bid.
“I am pleased with the results of this sale,” Khouri said. “The state of Michigan has worked hard to improve its finances and economy, demonstrating to the marketplace that our state is a sound investment. Today’s transaction provides resources to help better the quality of life of our residents.”
Bond proceeds primarily support water infrastructure, asset management plans, and water quality monitoring in communities across the state.
“Modern and reliable infrastructure continues to be a top priority for Michigan,” said C. Heidi Grether, director of the Michigan Department of Environmental Quality. “These funds have allowed us to invest in our future by helping communities make necessary updates and repairs to aging water and sewer systems.”
Prior to the bond sale, S&P, Moody’s and Fitch conducted a thorough review of the state’s economy and finances to determine a credit rating. The state received an Aa1 rating with a “stable outlook” from Moody’s, an AA rating with a “stable outlook” from Fitch and an AA- rating with an improved “positive outlook” from Standard and Poor’s.
These ratings enable the state to borrow money at a low interest rate, which translates to taxpayer savings and reflects improvements in the state’s economy and fiscal condition since the recession.
Dykema Gossett PLLC served as bond counsel, with Robert W. Baird as financial advisor on the sale.
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