State treasurer refinances more than $1.88 billion in old bond debt, saves taxpayers $403 million

  ·  Lake County News   ·  Link to Article

California State Treasurer Fiona Ma has announced the sale of $2.02 billion of state of California general obligation, or GO, bonds, which included $1.63 billion of bonds used to refinance more than $1.88 billion of bonds issued in April 2009 when the state was experiencing budget challenges and interest rates were higher. 

Refinancing of the old debt will save taxpayers more than $403 million in debt service costs over the next 10 years, or more than $362 million on a present value basis.

These savings along with the savings from the State’s March GO bond sale will save taxpayers more than $1.42 billion over the next 19 years.

“April is financial literacy month and the huge savings achieved by this bond sale offers a wonderful teaching moment that illustrates the impact of wisely managing our debt,” Treasurer Ma said. “It works the same for the State as it does for California families – by refinancing your home mortgage, you can save more in your rainy day fund for unforeseen emergencies and other needs. My office will continue to refinance the state’s existing debt to reduce debt service costs whenever possible.”

In addition, the sale included over $384 million in new money bonds for voter approved infrastructure programs. The bond act receiving the largest amount of new money is the Kindergarten Through Community College Public Education Facilities Bond Act of 2016 ($181.45 million). These funds will be used for K-12 school projects throughout the state. 

The new money bonds will provide funding for 15 different bond acts approved by voters between 1998 and 2018 as described below:

– California Clean Water, Clean Air, Safe Neighborhood Parks, and Coastal Protection Act of 2002;

– California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor Access For All Act of 2018;

– Children's Hospital Bond Act of 2008;

– Class Size Reduction Kindergarten-University Public Education Facilities Bond Act of 1998;

– Disaster Preparedness and Flood Prevention Bond Act of 2006;

– Highway Safety, Traffic Reduction, Air Quality and Port Security Bond Act of 2006;

– Housing and Emergency Shelter Trust Fund Act of 2006;

– Kindergarten Through Community College Public Education Facilities Bond Act of 2016 (K-12);

– Kindergarten-University Public Education Facilities Bond Act of 2002;

– Kindergarten-University Public Education Facilities Bond Act of 2004;

– Safe Drinking Water, Water Quality and Supply, Flood Control, River and Coastal Protection Bond Act of 2006;

– Safe Neighborhood Parks, Clean Water, Clean Air, and Coastal Protection Bond Act of 2000 (the Villaraigosa-Keeley Act);

– Safe, Reliable High-Speed Passenger Train Bond Act for the 21st Century;

– Water Quality, Supply, and Infrastructure Improvement Act of 2014;

– Water Security, Clean Drinking Water, Coastal and Beach Protection Act of 2002.

Some key statistics from this sale:

· Final size: $2,023,975,000.

· Final yields to investors ranged from a low of 1.47 percent for a 2020 maturity to a high of 3.31 percent and 2.77 percent for a 2045 maturity with 3.25 percent and 5.0 percent coupons, respectively.

· All-in true interest cost: 2.403 percent.

The joint senior managers for the sale were Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC. Stifel, Nicolaus & Company, Inc.served as co-senior manager. There was also a large syndicate of co-managers and selling group members.

The calendar of all upcoming state bond sales is available at