Market Conditions Save Louisiana Millions

BATON ROUGE, LA – For the first time in three years,Louisiana accepted competitive bids on $347 million worth of general obligation state bonds, at an interest rate resulting in savings of approximately $12.5million for the state compared to the last general obligation bond issue in1997. State Treasurer John Kennedy announced another first for Louisiana – all bonds were sold over the Internet.

Investors are no longer required to report in person to place bids on bonds, which allows us to make a sale in a matter of minutes, said Treasurer Kennedy. This saves the state valuable time and money and enables us to use technology to do a better job for our customers.

Goldman Sachs beat out Merrill Lynch and Paine Webber’s competitive bids with a 5.19 percent interest rate. The interest rate was significantly 30 basis points less than the state’s 1997 competitive bond sale resulting in the announced savings for the state.

The improved financial situation of the state and recent fluctuations in the stock market helped contribute to a favorable bond market for Louisiana. Last weeks upgrade of Louisiana’s bond rating by Standard and Poor’s from A- to A was also perceived by the markets as a step in the right direction.

Continued efforts to reduce the state’s debt have also positively impacted the bond market. There has been a 49 percent per-capita reduction in net state tax supported debt from 1991 to 1999.

Proceeds from the bond sale will fund approved capital outlay projects that will benefit higher education, local governments,transportation projects, public safety and corrections, and tourism, among other areas.

I commend the Bond Commission, the Administration and the Louisiana Legislature for their continued hard work in improving the state’s financial situation and for their efforts in making this bond sale a success, said Treasurer Kennedy.

Contact:
Sarah Mulhearn, Communication Director
(225) 342-0012