Secretary of Finance Announces Successful Bond Sale

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.

Moody’s Agrees to Settlement With States and Federal Government Over Securities Ratings

States, USDOJ Alleged Moody’s Inflated Ratings and Contributed To Market Crash.

Attorney General Matt Denn joined the U.S. Department of Justice and 20 other attorneys general in announcing a settlement resolving an investigation into Moody’s Corporation, Moody’s Investors Service, Inc., and Moody’s Analytics, Inc. (collectively “Moody’s”) over the companies’ misrepresentations regarding the independence and objectivity of its ratings of structured finance securities, securities which contributed to the 2008 market crash and economic recession that followed.

The settlement includes required business reforms by Moody’s and payments totaling $863 million to the federal government and states.

The residential mortgage-backed securities (RMBS) and collateralized debt obligations (CDOs) examined in this investigation are structured finance securities that derive their value from the monthly payments consumers make on their mortgages. Despite repeated statements emphasizing its independence and objectivity, Moody’s allowed its analysis to be influenced by its desire to earn lucrative fees from its investment bank clients, and assigned inflated credit ratings to toxic assets packaged and sold by the Wall Street investment banks. This alleged misconduct began as early as 2001, and became particularly acute between 2004 and 2007. These securities, particularly those backed by subprime mortgages, were at the center of the financial crisis. The state does not allege that Moody’s committed any wrongdoing against any individual homeowner with respect to a mortgage.

Moody’s represented to consumers that its Aaa rating carried a specific level of risk, and the investigation found evidence that Moody’s altered its process so that the Aaa rating with respect to certain structured finance securities represented a greater risk than Moody’s disclosed to investors and consumers. Delaware’s investigation found evidence that Moody’s deviated from certain of its published methodologies related to its rating of structured finance securities through the end of 2013. The investigation also found evidence that Moody’s gave in to pressure from big banks, which were powerful, repeat customers that paid Moody’s millions of dollars to rate these securities. The banks needed Aaa ratings in order to sell these securities to institutional investors, such as pension plans and retirement plans.

In addition to the monetary settlement, Moody’s has agreed to a detailed statement of facts in connection with the way it rated RMBS and CDOs leading up to the financial crisis, and significant compliance terms – including an annual certification by the CEO of Moody’s Corporation, which will be provided to the settling states every year for the next four years, certifying that Moody’s is following certain compliance requirements. Delaware’s share of the financial component of the settlement is $6,768,533.

Delaware was represented by Deputy Attorneys General Matthew Lintner, Gregory Strong, and Jillian Lazar in this matter.

Read the U.S. Department of Justice press release, which includes links to the settlement documents, here.

Successful State Bond Sale Saves Taxpayers Over $8M

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

Delaware Earns Universal Triple-A Credit Rating

Delaware has received a triple-A credit rating from all three major rating agencies – the highest mark a government agency can achieve. Highlighting the state’s fiscally responsible approach, Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s Rating Services have recognized the state’s strong fiscal practices, as well as the strength of Delaware’s economy and labor market.

“These reports affirm our progress in strengthening Delaware’s economy, while budgeting responsibly,” said Governor Jack Markell. “Recognition of Delaware as one of the top rated states shows Delaware is well-positioned for continued success. However, our work is never finished. We must continue efforts to prepare our workers with the skills they need to compete for jobs, foster a nurturing environment for businesses to start and expand in the state, and ensure our budget is sustainable for years to come.”

The reports take into account expected workforce reductions in the first quarter of 2016 due to the DuPont merger with Dow Chemical, but cite positive trends and continued growth in other employment areas – including business services, financial activities, education, health, leisure and hospitality.

In its analysis, Standard and Poor’s pointed to Delaware’s “diverse economy,” “strong financial and budget management,” “consistently strong general fund reserves,” “moderate overall debt burden,” and “well-funded pension system.”

Delaware has now earned the top rating from all agencies for the past 16 years, including through the recent economic recession and ongoing recovery.

“Delaware has maintained its triple-A ratings through some challenging economic cycles – in large measure due to our disciplined adherence to responsible fiscal practices and focus on economic development,” said Secretary of Finance Thomas J. Cook. “Even through the Great Recession, this administration has maintained the highest possible credit ratings through strong financial management and fiscal discipline, while improving our business climate. The confirmation of our rating will translate to the lowest cost of capital, permitting greater investment in the essential infrastructure that is essential to attracting new business and spurring job creation.”


Leslie A. Poland
Public Information Officer
Delaware Department of Finance
(302) 577-8522