Fitzgerald: state's $628 million bond sale a success

DES MOINES – Proceeds from the state of Iowa's successful $628 million bond sale could be available by next Tuesday to finance I-Jobs infrastructure programs, State Treasurer Michael Fitzgerald said Wednesday.

Fitzgerald said investor enthusiasm and high market demand for the Iowa bonds helped drive down the interest rate to 4.31 percent, which resulted in a $42 million yearly payback for the state and a roughly $12 million annual savings over what originally was budgeted to repay the borrowing.

“We had a great deal of good fortune. Our Aaa rating really came through for us,” Fitzgerald said in an interview.

“Investors were impressed with the state of Iowa and put their money on the table to show it. There was strong support for the bonds from Iowans and from national institutional investors,” he added.

“This is where our balanced budget, our surpluses that we have and our history of running the state – we're not California or even Minnesota or Wisconsin or New York right now. All those states are having trouble and we're doing well,” the state treasurer said. “In fact, one of the investment bankers said Iowa is a refreshing contrast to the other states that have been coming to the market.”

Fitzgerald said proceeds from the sale of the I-Jobs bonds should be available as early as next Tuesday. After that, money will begin going out to fund disaster rebuilding and prevention projects, bridge rehabilitation and infrastructure projects -- including upgrades at state correctional facilities, the Iowa Veteran's Home and in various Iowa communities through the Community Attraction and Tourism (CAT) program.

Money from the sale will also go toward grants for sewer improvement, affordable housing, alternative energy, and broadband deployment, he added. The bonds will be repaid with yearly gaming revenues from Iowa's casinos and racetracks.

Demand for Iowa's bonds was so high that investors had to be turned away, Fitzgerald said, noting he had nearly $1.5 billion worth of orders when the bonds went on the market and the issue sold out within 90 minutes at an interest rate more than a half-point lower than he anticipated.

 “We were expecting a great sale, but it exceeded our expectations,” the state treasurer said. “The state of Iowa got a great rate because we're a solid operator. People wanted our bonds because of the confidence in the state of Iowa. We hear a lot of negative news these days, but this was a positive story for the state of Iowa.”