July 18, 2019
State Treasurer Rachael Eubanks today announced that the state of Michigan successfully sold more than $235 million in 2019 revenue and refunding State Building Authority bonds.
The sale came with strong investor interest as more than 85 investors put in orders for bonds. Exceptionally high demand resulted in a lower interest rate on the bonds (all-in true interest costs of 3.19%) maturing in 2054, with several new investors purchasing the bonds.
The bonds are being issued to refund the outstanding 2009 I and II series bonds, which will result in over $11 million in annual lease cancellation savings for the state through 2032. In addition, the bonds will refund outstanding commercial paper supporting capital outlay projects and fund the completion of some of those projects.
“This was a tremendously great day for the state of Michigan,” Eubanks said. “The strong demand for Michigan bonds shows that investors are willing to put their dollars behind our state. The credit ratings agencies also displayed confidence in Michigan’s economic and financial health by affirming their credit ratings.”
Prior to the bond sale, the credit rating agencies conducted a thorough review of the state’s economy and finances in order to assign the state a credit rating. The state’s credit ratings were affirmed by Standards and Poor’s at AA Stable, Moody’s Investor Services at Aa1 Stable and Fitch at AA Stable.
Due to the bonds being an appropriation credit of the state, the rating agencies rate the State Building Authority bonds one notch below the credit ratings of the state of Michigan. The authority’s bonds are rated AA- by S&P, Aa2 by Moody’s and AA- by Fitch.
The strong 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.
Miller Canfield served as bond counsel, with Robert W. Baird as municipal advisor on the sale.
The State Building Authority acquires, constructs, furnishes, equips and renovates buildings and equipment for the use of the state, including public universities and community colleges. It is governed by a five-member board of trustees appointed by the governor, with advice and consent of the state Senate.