Pennsylvania sold $950 million of general-obligation bonds today, its largest tax-exempt offering since 2006, with yields at the lowest it has ever achieved.
Goldman Sachs & Co. (GS:US) won bidding for the deal, the state and the bank said. A bond maturing in June 2022 was priced to yield 2.16 percent, while similarly rated debt was yielding 2.41 percent yesterday, according to a Bloomberg Fair Market index.
The average cost of the offering, with a final maturity in 2032, was 3.01 percent, the lowest rate the state has ever received on general-obligation debt, said Eric Shirk, a spokesman for Governor Tom Corbett, a Republican. An index of top-rated 10-year munis yielded 2.14 percent yesterday.
“We are very pleased with where we priced,” Shirk said by e-mail. “It speaks volumes to the strength of the commonwealth’s credit.”
Securities maturing in June 2032 were priced at the highest yield, 3.63 percent, yet that was 18 basis points lower than the Fair Market index for AA+ rated debt, at 3.81 percent yesterday. Moody’s Investors Service rated the bonds a similar Aa1, its second-highest grade. Standard & Poor’s rated the Pennsylvania deal AA, one step lower than AA+. A basis point is 0.01 percentage point.
Pennsylvania plans to use the proceeds to cover expenses tied to three state prisons, a judicial center in Philadelphia, environmental projects and fixing bridges, according to Shirk.
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