PROVIDENCE, R.I. - General Treasurer Gina M. Raimondo today announced that Rhode Island has sold $31,980,000 Certificates of Participation (COPs) issue, which included $7 million in orders from Rhode Island retail (or individual) investors, who were given purchase priority. The funds will be used for energy conservation projects at the University of Rhode Island, the Pastore Complex and Zambarano State Hospital. The energy cost savings generated from these projects should be sufficient to pay for the debt service on the COPs.
“The success of this offering illustrates investor confidence, locally and nationally, in our state,” Raimondo said. “I attribute our success to enhancing the disclosures in the state’s offering statements and our commitment to achieving pension reform and maintaining fiscal balance. I commend Treasury staff, the state Budget Office and the state’s financing team on an excellent job in bringing the issue to market.”
“The State of Rhode Island can take pride in this reception from the capital markets during a very busy week,” Maureen Gurghigian, First Southwest Managing Director, State Financial Advisor. “The months of long preparation for this offering paid off for the state.”
Rhode Island made a series of important upgrades related to improving the disclosure of its financial information in advance of this offering, including the launch of an investor relations Web portal, a one-stop clearinghouse for all of the state’s pertinent financial information. After a complete review of all bond disclosure practices, other changes included:
- Improvement and expansion of the information statement and related disclosure information to accompany all future bond offerings - Development of a training program for state employees on bond disclosure practices and standards - Development of new procedures and protocols for executing bond offerings
“Transparency is paramount when it comes to public finances,” Raimondo said. “Building and maintaining trust and confidence are essential to moving the state onto firmer financial ground.”
The COPs were rated by Moody’s Investor Service, Standard & Poor’s Corporation and Fitch Ratings: Aa3, AA- and AA-, respectively. In connection with this sale, Fitch Ratings revised its outlook on the state from negative to stable, citing “the state's improved financial position, stabilizing economic indices, longstanding financial controls, and prudent issuance of additional debt.” In addition, the three rating agencies affirmed the state’s General Obligation ratings of “Aa3” by Moody’s Investors Service, “AA-“ by Standard & Poor’s Corporation and “AA” by Fitch Ratings.
Interest rates on the bond issue ranged from .63 percent for a one-year investment to 4.57 percent for a 15-year investment. These interest rates translate into a true interest cost (TIC) of 3.47 percent. The sale was led by Citigroup and Morgan Keegan, and also included Fidelity, Oppenheimer, Ramirez & Co., Roosevelt & Cross and TD Securities.