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Alabama Issues Bonds at Historic Low Rate to Finance I-65/20/59 Bridge Projects


August 3, 2017

MONTGOMERY - State officials finalized the sale of federal highway bonds that will fund a series of bridge projects on I-65/20/59 in downtown Birmingham.

The Alabama Federal Aid Highway Finance Authority sold $492.3 million of 20-year, fixed-rate bonds tied to the projects through the Federal Grant Anticipation program, more commonly referred to as GARVEE. The bonds sold at the historically-low interest rate of 2.99%, which is believed to be the lowest interest rate ever achieved by the State for a long-term issue.

Standard & Poor’s assigned its highest rating, ‘AAA’, to the bonds, citing Alabama’s strong debt service coverage levels and track record of responsible debt management. The GARVEE program is the first series of bonds for which the State of Alabama has ever received the AAA rating. S&P also affirmed its AAA rating for the 2016 series and maintained their outlook at ‘stable’.

The Authority also approved refinancing $146.2 million of its 2012 series bonds at an interest rate of 1.86%, which will save $11.0 million over the next 10 years. Citigroup and Goldman Sachs led the underwriting syndicate with Rice Advisory serving as the Financial Advisor.

“Of course, we were very pleased with the ‘AAA’ rating awarded by Standard and Poor’s, as it represents a landmark recognition of the financial strength of our State,” said State Finance Director Clinton Carter. “Ironically, when economic conditions stand as they do today, where interest rates are lower than inflation in the cost of construction, it’s actually less expensive for the state to finance with bonds than to pay with cash.”

For more information, please contact the Alabama Department of Finance Communications Office at (334) 242-7160.

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