Thursday, July 29, 2010

MD Sells Another $485m in Bonds to Finance Debt

from The Maryland Daily Record:

Maryland sold $485 million in bonds on Wednesday to pay for the construction of capital projects, like schools and prisons, across the state.

The state Treasurer’s Office sold $143 million with an interest rate of 1.6 percent through a direct retail sale, with priority given to Maryland residents. The balance, $342 million, was sold through a competitive bidding process.

The sale was approved Wednesday by the Board of Public Works.

Bank of America Merrill Lynch accounted for nearly half of the bond sale, buying $221.7 million in tax-exempt bonds that carry a 1.9 percent interest rate.

J.P. Morgan Securities Inc. bought $75 million in Build America Bonds — under the economic stimulus package, the federal government subsidizes states’ interest payments — at 2.7 percent interest.

And Morgan Keegan & Co. bought $45.2 million in school construction bonds at 4.4 percent interest. State Treasurer Nancy K. Kopp said the federal government will cover all of the state’s interest payments on those bonds.

“I was really pleased with today’s results,” Kopp said. “Again, Maryland’s [triple-A] rated bonds drew significant interest — and a very low interest rate.”

Kopp noted 60 percent of the bond proceeds would go to schools, colleges and universities.

Maryland’s top bond ratings from all the three major ratings houses were reaffirmed this month as the state prepared to conduct the bond sale. Kopp on Wednesday said the state’s AAA rating saved taxpayers “millions of dollars.”

The state delayed the sale of $4.5 million more in school construction bonds and the refinancing of bonds worth $100 million until the treasurer finds more favorable market conditions.

Kopp said she expects to hold the state’s next bond sale in February or March.

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