Commonwealth Conducts Successful Bond Sale with New and Refunding Issuances, Saving Taxpayers Nearly $100 Million Over the Life of the Bonds, With Credit Rating Upgrade Contributing Up to $12 Million of Benefit
December 12, 2023
The recent sale of General Obligation Bonds will save Commonwealth taxpayers millions over the life of the bonds in part due to the improved bond rating upgrade by Fitch Ratings.
All three major credit rating agencies have either positively revised the Commonwealth’s ratings outlook or increased its rating.
Harrisburg, PA – Today, Shapiro Administration Secretary of the Budget Uri Monson announced the successful sale of approximately $1.3 billion in new General Obligation Bonds – with a refunding in an issuance amount of approximately $753 million, which paid to refinance approximately $845 million of outstanding bonds.
Bond refinancing of prior year debt will save Commonwealth taxpayers millions on debt service savings over the life of the bonds – including $99.7 million in gross debt service savings and $80.7 million of net present value debt service savings.
“Credit ratings make for good headlines, but more importantly, our sound fiscal management is saving the Commonwealth and our taxpayers millions of dollars,” said Secretary of the Budget Uri Monson. “Thanks to our recent credit rating upgrade, we are able to fund programs that support the citizens of the Commonwealth instead of higher interest payments.
The improved pricing performance is due in part to the improved Commonwealth Bond Rating from Fitch to ‘AA’ from ‘AA-’ and improved ratings outlooks to ‘positive’ from ‘stable’ from Moody’s and S&P in September, respectively. As a result of the improved rating and outlooks, Commonwealth taxpayers are expected to benefit from $6 – $12 million in savings.
The Commonwealth sold the bonds across four separate bid groups, allowing for improved participation and competition amongst bidders and investors. Across the four groups, the Commonwealth received a total of 29 bids, comprised of eight different bidding entities.
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