Massachusetts’ strong credit rating has saved taxpayers $6.7 million as the state was able to sell short-term borrowing notes at a new record low, according to State Treasurer Steven Grossman. The $800 million in borrowing was done at an interest cost averaging only 5.4 basis points, or .054 percent, his office said.
The borrowing involved the sale of revenue anticipation notes – or RANs – that are issued to cover short-term funding needs. The RANs were sold in three different series, each with a different maturity date. The $200 million Series A RANs are scheduled to be repaid in April 2014, the $300 million Series B RANs in May 2014, and the $300 million Series C RANs in June 2014.
The last time the treasurer’s office sold RANs, the average interest cost was 9.7 basis points, at the time a new record low. The 5.4 basis-point interest cost from the sale, announced Thursday, is 44 percent lower than that past record and will cost $6.7 million less than what was anticipated in the budget for fiscal year 2014, the treasurer noted. Other states, such as Texas and California, recently sold RANs at a cost of more than 20 basis points, according to Grossman’s office.
“Our solid fiscal discipline, enhanced transparency, and our highest-ever credit rating is saving taxpayers millions of dollars when we go to market with our bonds and notes,” said Grossman. “The resounding success of this sale reinforces Massachusetts’ reputation as a strong fiscal steward and a sound investment.”
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