State of Illinois Sells $965 Million in Bonds

On Wednesday, the State of Illinois sold $965,770,000 in General Obligation Refunding Bonds, Series A and Series B of September 2018. The $641,160,000 Series A of September 2018 was a takeout of the State’s $600 million in 2003B variable rate bonds and the termination of five swaps associated with those bonds.

The refunding will eliminate all the variable rate exposure and remove the highest-cost debt from the State’s capital market programs. Proceeds from the $324,610,000 Series B Bonds of September 2018 will be used to refund several series of previously issued general obligation bonds of the State. Total debt service savings of $33,643,047, or 5.89 percent of present-value savings were derived from the Series B Bonds, and each individual bond selected for refunding in this series had in excess of 3 percent present-value savings to the State. The State received bids from 87 institutional investors totaling $4,166,070,000 in orders or a 4.3 times subscription for the bonds.

This bond issue has an all-in borrowing cost for the combined series of 4.19 percent. The bonds are being issued as fully exempt from federal taxation and are rated BBB by Fitch Ratings, Baa3 by Moody’s Investor Service and BBB- by S&P Global.

“We are very pleased with the strong investor response to today’s bond sale. By refunding the $600 million in variable-rate debt, the State eliminates its highest-cost debt and replaces it with traditional fixed-rate bonds carrying a much lower overall rate of interest,” said Hans Zigmund, budget director for the State. “By refunding other outstanding bonds with higher fixed rates as part of the same bond sale, we maximized savings and minimized the costs of the sale. Taxpayers will realize these savings for years to come.”

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