New Maryland bonds carry lowest rate in 13 years

October 10, 1991|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS -- Maryland sold $120 million in general obligation bonds yesterday at 5.8 percent interest, the lowest rate the state has had to pay to borrow money in 13 years.

Top state officials attributed the low bid to the state's triple-A bond rating, which they said was kept secure by Gov. William Donald Schaefer's swift action last week to bring under control a $450 million deficit that developed during the first quarter of fiscal 1992, which ended Sept. 30. A syndicate of financial institutions from across the country headed by Goldman Sachs was the lowest of four bidders, with a bid of 5.802241 percent for the bonds, which have maturities of three to 15 years.

"If we hadn't [cut the budget] last Wednesday, we wouldn't have the triple-A today," said Comptroller Louis L. Goldstein, one of the three members of the Board of Public Works.

Another member, state Treasurer Lucille Maurer, noted that all three bond rating houses -- Moody's Investors Service, Standard and Poor's Corp. and Fitch Investors Service -- "commented on the governor's quick response" in designating Maryland once again as a triple-A state, the highest possible rating.

Maryland is one of only six states that has retained its triple-A rating from at least two of those rating services during the current recession.

Monday's edition of the weekly Moody's Bond Survey said that this of the bond sale: "Superior state credit quality derives from broad and diverse economy, high wealth levels and long record of sound financial operations. State continues to act effectively to maintain financial balance in spite of cyclical downturn. Underlying strength is provided by strong financial management and control."

Proceeds from the sale will be used for general state construction, public school construction, hospitals and nursing homes, jails and other correctional facilities, and a variety of local projects, from senior centers to cultural or recreational projects.

The last time the interest rate on a state bond sale was lower was June 1978, when $115 million in bonds were sold for 5.3325 percent interest. In June 1981, when interest rates soared nationwide, Maryland sold bonds at an all-time high for the state of 11.3 percent.

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