Wilmington, DE (February 17, 2022) – Finance Secretary Rick Geisenberger announced today that Delaware successfully sold $255 million in general obligation bonds in a competitive bond sale on Wednesday. Of the amount sold, $32.5 million represents a refinancing at lower interest rates, saving taxpayers more than $7.8 million in total debt service over the next 12 years.

“I again thank State employees and the General Assembly,” said Governor John Carney.  “Working together over the past 5 years, we have successfully managed the State’s finances through the turbulence of a major budget deficit, a pre-pandemic recovery, and the COVID emergency.   Now through the resilience of all Delawareans and our business community, we’re emerging from the pandemic stronger than ever.  This confidence is reflected in the public markets by this very successful bond sale.”

The State’s annual sale follows the recent announcement from Fitch, Moody’s and S&P Global Ratings that Delaware has maintained the highest possible AAA rating for its bonds. The rating is assigned based on criteria measuring the state’s economy, financial management, debt load and long-term costs. All three ratings reports highlight Delaware’s history of strong financial governance and specifically note regular fiscal updates, long-term forecasts, and reserve and debt management policies as contributing to the State’s ability to navigate national financial shocks.

Bond proceeds will fund numerous capital projects previously authorized by the General Assembly-including close to $200 million in school construction projects plus funding for housing and community development, National Guard training facilities, the Delaware Public Health Lab, library construction, court facilities, higher education campus improvements, and the rehabilitation of park and wildlife areas.

“Delaware has a well-earned reputation for strong fiscal governance and controls that has been built over many decades,” said State Treasurer Colleen Davis.  “The State’s liquidity has never been stronger and with the guidance of the Cash Management Policy Board, my office will continue its work to build the confidence that underlies the State’s Triple-A bond ratings.”

“Over the last two years, the State has sold $875 million in bonds at an extraordinarily low, average interest cost of 1.76%,” said Secretary Geisenberger.   “Re-affirmation of the State’s Triple-A bond ratings helps to ensure that State taxpayers will continue to save millions of dollars in financing costs and are a testament to the State’s long-term commitment to economic and financial stability.”

Refunding transaction helps address the State’s budget challenges

WILMINGTON, Del. – The State of Delaware today announced the successful refunding of $33 million of debt at a record low Total Interest Cost of 0.79%. The transaction will save the State $5.2 million in debt service on a net present value basis over the next decade and is structured to further help the State address the Fiscal Year 2021 budget challenges brought on by the COVID-19 emergency.

Three bond rating agencies reaffirmed Delaware’s Triple A rating – Fitch, Moody’s and KRBA – with each taking note of the work of Governor John Carney and the Delaware General Assembly in recent years to boost reserves to prepare for economic downturns. J.P. Morgan Securities LLC served as senior managing underwriter for the transaction.

View rating agencies’ credit reports.

“Delaware continues to receive high marks for fiscal management which allows us to sustain the important investments we’ve made in our schools, our communities and our economy, including efforts to address the impacts of COVID-19,” said Governor John Carney. “The COVID-19 emergency presents enormous financial challenges for every state including Delaware. But I think all Delawareans can be proud of the work we’ve done with the General Assembly to boost the State’s finances prior to this unanticipated event, so our State is better prepared to weather the storm.” 

“This successful transaction shows the market’s confidence in Delaware despite the near-term challenges faced by every state,” said Secretary of Finance Rick Geisenberger. “The competitive pricing and debt service savings achieved for Delaware’s taxpayers speak volumes about our State’s continuing financial strengths.”

“The reaffirmation of the State’s Triple-A bond rating is a huge vote of confidence during these uncertain economic times,” said State Treasurer Colleen Davis. “The State’s best practices including using one-time revenue for one-time expenses, and increasing our reserves, will go a long way to see that we emerge from this crisis maintaining our economic strength.”

KRBA views the financial position of the State as “very strong based on its conservative budgeting policies, comprehensive and timely process of revenue estimation, high levels of financial reserves and strong liquidity. In response to the economic impacts of pandemic, the State has constrained its FY2020 spending and projected expenditures are under budget.”

Moody’s noted that “Delaware’s Aaa rating is supported by its healthy and stable finances and its strong management and governance, all of which enhance the state’s capacity to weather the economic downturn caused by the coronavirus outbreak. The state’s recent growth in reserves provide a cushion in the currently challenged economic environment brought on by the coronavirus pandemic.”

Fitch also noted that “Delaware’s history of exceptional financial resilience and strong budget management may be tested by the depth and duration of this downturn. However, Delaware’s close tracking of both revenues and expenditures and frequent revenue forecasts updates have historically allowed it to quickly respond to changing economic conditions. Fitch anticipates the state will take appropriate action to maintain balance.” 

###

Bond refunding saves taxpayers $15 million

WILMINGTON, Del. – Delaware’s proactive fiscal management has been recognized with the announcement of the State’s triple-A bond ratings and an upgrade of the rating for Delaware Transportation Authority (DTA) bonds. The State’s ratings were issued in advance of the refunding of $123 million of Series 2009D Build America Bonds that will save Delaware taxpayers more than $15 million over the next decade. DTA’s ratings were issued as the Authority priced $138 million of new Series 2019 Transportation System Senior Revenue Bonds. Bond ratings reflect an issuer’s financial management policies and practices, ability to make future debt service payments, and economic strength, stability and diversity. Both the State and DTA’s bond issues were priced at interest rates that will result in historically low costs for Delaware taxpayers. 

“Delawareans expect us to responsibly manage taxpayer dollars, and that’s exactly what we’re doing,” said Governor John Carney. “We have an ongoing commitment to ensuring that our fiscal house is in order. These important bond issues and our excellent bond ratings will save us money, and help finance important infrastructure projects like schools and roadway projects all across our state.”

The State’s August refunding refinanced $123 million of outstanding debt through a competitive bid process resulting in a 1.12% all-in borrowing cost — the lowest in modern state history for debt of a similar maturity. The State general fund will realize savings of $1.12 million in the current fiscal year alone. The original bonds financed numerous capital projects including schools, libraries, and other state infrastructure projects.  

“The State’s very successful refinancing reflects a team effort by the Carney Administration, the General Assembly, and our financial and legal advisors,” said Secretary of Finance Rick Geisenberger. “Delaware’s premier bond rating reflects many years of prudent fiscal management and recent efforts to limit operating budget growth, boost reserves during good times, and steer one-time revenues to one-time projects. Our goal continues to be preserving the State’s financial flexibility while ensuring that public borrowing is done responsibly and affordably.”

DTA priced its $138 million of new bonds at a competitive all-in rate of 2.11%. This rate followed the announcement that DTA’s bond rating was upgraded by Moody’s Investor Services from Aa2 to Aa1 while Standard & Poor’s reaffirmed its AA+ rating. Moody’s also upgraded the Authority’s outstanding US 301 Project Revenue Bonds Series 2015 from A1 to Aa3 and its Transportation Infrastructure Finance and Innovation Act (TIFIA) Series 2015 Bonds from A2 to Aa3. The Delaware Department of Transportation’s steady reduction in its overall debt combined with continued positive trends in toll, DMV and motor fuel revenues helps lower the cost of capital and frees up funding to further maintain and improve transportation infrastructure throughout Delaware.    

“We are very pleased with the rating services’ upgrade, and having a strong rating enables the Department to get the most out of every taxpayer dollar,” said Secretary of Transportation Jennifer Cohan. “DelDOT is excited to continue delivering on Delaware’s largest Capital Transportation Program in its history.”

###

Finance Secretary Rick Geisenberger today announced that the State closed on the sale of $250 million in triple-A-rated general obligation bonds in last week’s bond sale. This was the second bond sale within four months.

“New federal tax policy eliminates the State’s ability to ‘advance’ refund its general obligation bonds for savings, so, in November, we took advantage of an opportunity to capture refunding savings of $4.7 million,” said Secretary Geisenberger. Last week’s sale of $250 million will fund capital projects including new schools in the Appoquinimink, Caesar Rodney and Laurel school districts, improvements to many other public schools as well as museums and the Port of Wilmington. These and many other capital projects are authorized by the General Assembly in the annual bond bill.

With triple-A ratings recently reaffirmed by Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s Rating Services, Delaware’s bonds were well received even in the recent volatile marketplace. The sale brought interest from a variety of investors, including bond funds, insurance companies, bank portfolios and separately managed accounts.

Wilmington, DE – Finance Secretary Thomas J. Cook announced today that Delaware successfully sold $236 million in triple-A-rated general obligation bonds in Tuesday’s annual bond sale, effectively netting a savings of over $8 million for Delaware taxpayers.

With triple-A ratings recently re-affirmed by Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s Rating Services, Delaware was able to obtain some of the best pricing relative to the triple-A index in recent history, even in a volatile market. “Credit quality matters and translates into reduced interest costs to taxpayers,” said Cook. “In this case, the triple-A rating saved Delaware taxpayers $5.8 million when compared to double-A rates.”

Of the $236 million of bonds sold, $36 million sold as Series C represents a refinancing at lower rates, saving taxpayers more than an additional $3 million.

“It is our responsibility to ensure we are using taxpayer dollars efficiently and maximizing the return on our investments,” said Governor Jack Markell. “Our triple-A rating, and the benefits that come with it, are the result of the fiscal discipline and prudent financial management that have become Delaware’s hallmark.”

Delaware’s combined cost of capital on this loan was 2.32%. “While not the lowest ever, it is lower relative to other high quality issuers that have been in the market recently,” said Cook. The state received seven bids; awarding Morgan Stanley &Co., LLC as the highest bidder on Series A, J.P. Morgan Securities LLC on Series B, and Bank of America Merrill Lynch on Series C.

The remaining $200 million, Series A and B, represents various capital projects – including over $100 million in school construction projects, improvements to the Veteran’s Home, National Guard readiness facilities, the Port of Wilmington, libraries around the state, and the rehabilitation of park and wildlife areas.

###

Leslie A. Poland
Public Information Officer
Delaware Department of Finance
(302) 577-8522
leslie.poland@delaware.gov