Note: This page is part of the Governor's News Archive, which holds press releases from January 2009 through September 2011. Since October 2011, recent news can be found in the Newsroom and archived news is available at news.delaware.gov.
October 07, 2009
Dover – The country's three major bond-rating agencies have affirmed Delaware's triple-A ratings based, in part, on the state's strong fiscal management practices.
“Delaware is being rewarded for the fiscal discipline exercised during these challenging times,” Gov. Markell said. "Members of the General Assembly and this administration made the tough choices to responsibly solve last year's historic budget challenge and those decisions are paying off now. We will still face significant challenges in the upcoming budget, and it is important we work together in a bipartisan way and exercise the same discipline as we address Delaware's financial future."
The agencies specifically cited state officials' decisions to appropriate only 98% of available revenue for the fiscal 2010 budget, which allows for a cushion if revenues fall, and the decision to maintain the Rainy Day Fund. The agencies also praised the Delaware Economic and Financial Advisory Council for its revenue forecasts.
"The highest rating assigned to the state's general obligation debt is based on strong financial management characteristics and a history of maintaining ample budgetary reserves throughout recent economic cycles," Moody's wrote in its report on Delaware.
State Sen. Gary Simpson, the Republican leader in the Senate, participated in presentations to rating agencies in New York with the Governor and his financial team, showing a bipartisan commitment in Delaware to fiscally prudent principles.
“With so many other states in the country in such dire shape, these ratings show the importance of Delaware’s tradition of working together to govern responsibly,” Simpson said. “By not budgeting all of our expected revenues for FY10 or using our reserve funds, not only do we have a budget cushion if the economy worsens, but we have maintained the highest possible bond ratings and thus saved taxpayers millions of dollars in interest.”
The ratings have been received in conjunction with the State’s proposed issuance of $515.1 million of its general obligation bonds. Of the total bonds issued, $209.9 million represents new money for capital projects, primarily school construction projects, while over $305 million will refinance existing higher priced debt.
Refinancing at lower rates presents a considerable savings opportunity for the State’s debt service. “With rates at historically low levels, refinancing existing debt is prudent and will save the State money,” says Tom Cook, Acting Secretary of Finance. Of the $515.1 million in bonds being sold, $40 million will be reserved for retail investors.
In addition, the State will issue taxable bonds known as Build America Bonds taking advantage of the bonding provisions contained in the America Recovery and Reinvestment Act. The Build America Bonds, which earn a 35% subsidy from the federal government, will be sold to institutional buyers. “With a 35% subsidy from the federal government, these bonds represent a more cost effective alternative for the State than our traditional tax-exempt bonds,” says Cook.
Retail bonds will be available from the following brokers:
Morgan Stanley (877) 937-6739
Barclays Capital (800) 392-5000
Janney Montgomery Scott LLC (888) 567-4759
J. P. Morgan (888) 299-7553
Merrill Lynch (800) 937-0424 (Wilmington)
(800) 487-4518 (Rehoboth Beach)
(800) 937-0631 (Dover)
Stone & Youngberg LLC (800) 423-1992