Record Sale of State Bonds Scheduled ($584 million)

News release from state comptroller’s office:
With its high credit ratings just reaffirmed, the State of Tennessee plans to sell an estimated $584 million worth of bonds next week – the largest sale in the state’s history.
Some of the bond proceeds will be used to pay for new capital projects and infrastructure, including economic development grants for Volkswagen in Chattanooga, Wacker Chemie in Bradley County, Hemlock Semiconductor in Clarksville and Electrolux in Memphis. Those projects are expected to create 4,650 new permanent jobs, plus thousands more construction jobs and jobs in related industries.
The proceeds will also finance improvements to various state-owned buildings and properties across Tennessee, including a new research building for the University of Tennessee-Knoxville campus, a new library for the University of Tennessee-Chattanooga campus, a prison in Bledsoe County, renovations to the Supreme Court building and other state office buildings in Nashville and a new driver license center in Memphis.
Bonds will also be issued to refund (refinance) outstanding bonds to take advantage of low interest rates. Over time, the refunded bonds could save the state up to $10 million in interest costs.
The sale includes both taxable and tax-exempt bonds. Tennessee buyers must pay federal taxes on the taxable bonds, but they are not required to pay the state’s Hall Income Tax on interest earnings.
“This sale represents an excellent opportunity for people to buy Tennessee bonds,” Comptroller Justin P. Wilson said. “The major rating agencies have reaffirmed, once again, that our state is financially well-managed and therefore has strong credit-worthiness. I’m pleased that these bonds will be used to pay for a variety of needs our citizens have, including economic development projects that will create badly-needed jobs. Also, this sale represents an opportunity for us to save taxpayer money by capitalizing on low interest rates.”
Earlier this week, two of the major New York bond rating agencies – Fitch and Moody’s Investors Services – reaffirmed Tennessee’s AAA rating, which is the highest rating available. The third major agency, Standard and Poor’s, reaffirmed Tennessee’s AA+ rating, the second highest rating available. Among other factors used in determining the ratings, the agencies praised Tennessee for its sound financial management practices, low debt burden, well-funded pension plan and adequate reserves. The rating agencies expressed some concerns about a possible reduction in federal funding and the overall health of the economy – factors which are largely beyond the state’s control.
The bond sale will be held from Oct. 11-13. More information about the sale is available at The state is using an aggressive strategy to market the bonds. Senior staff members taped a presentation to provide investors with an overview of the bond offering. The web site provides information on the brokerage firms participating in the sale, as well as instructions for first-time investors on how to purchase bonds, a link to the preliminary official statement and the taped investor presentation.
The previous record for a state bond sale was $389.635 million in 2009.

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