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Bond sale garners state low interest
Friday, March 6, 2009
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ANNAPOLIS – Even in tough economic times, Maryland's prized AAA bond rating is paying dividends.
The Board of Public Works on Wednesday approved the purchase of $491 million in general obligation bonds at an interest rate — 3.39 percent — that Treasurer Nancy K. Kopp characterized as extraordinary given the state of the economy and an indication of the state's sound fiscal stewardship.
"Maryland bonds really are, at the moment, the gold standard in the market," she said.
For the first time, Maryland opened up bids this year to the retail market, in which Maryland residents had first crack at purchasing the bonds. Nearly $300 million in bonds, sold in denominations of $5,000, were bought that way, said Kopp (D). The success of the debut retail sale could encourage the state to make bonds publicly available again in its next sale in early August.
Merrill Lynch & Co. won the traditional competitive bid, submitting an interest rate of 3.39 percent for $199.2 million in general obligation bonds, which is one of the lowest the state has seen in 20 years, said Patricia Konrad, the state treasury's debt management director.
Maryland is one of only seven states to be assigned the top rating from all three major Wall Street bond agencies, which enables the state to borrow money for new schools, hospitals and jails at low interest rates.
