The State of Delaware announced the refunding of $33 million of debt at a record low interest rate of 0.79%. The transaction will save the State $5.2 million in debt service over the next decade and is structured to help the state address fiscal 2021 budget facing challenges from COVID-19.
Three bond rating agencies kept Delaware’s Triple A rating – Fitch, Moody’s and KRBA – with each taking note of the work of the state in recent years to boost reserves to prepare for economic downturns. J.P. Morgan Securities LLC served as senior managing underwriter for the transaction.
“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 Gov. 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.”
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.”
Carney has pushed for “budget smoothing,” with the General Assembly agreeing to set aside more money in anticipation of an economic downturn.
The House and Senate’s Joint Finance Committee is working on a budget that eliminates a pay hike for state employees. A revenue estimate this month will play a key role on whether further cuts take place.
