Mass. Sells $500M In Bonds After Credit Upgrade

Massachusetts sold $500 million worth of bonds Wednesday at an interest rate of slightly below 3 percent after securing what officials said was the highest credit rating in the state's history.

The general obligation bonds will help pay for capital projects around the state, said Treasurer Steven Grossman, who added that the lower rate will save the state tens of millions of dollars.

The sale came less than a week after Standard & Poor's upgraded the state's credit rating to AA+ from AA.

The sale came less than a week after Standard & Poor's upgraded the state's credit rating to AA+ from AA.

Grossman joined Gov. Deval Patrick and legislative leaders at a news conference to tout the improved rating, which the leaders said was the result of several steps taken cooperatively to stabilize state finances.

The upgrade "speaks volumes about the way our securities are being perceived in the marketplace and in the investor community," Grossman said.

Massachusetts also has ratings of Aa1 from Moody's Investors Services and AA+ from Fitch Ratings.

The 2.97 percent rate on the bonds sold Wednesday was significantly better than on the state's two most recent bond sales in the spring, the treasurer's office said. The winning bid came from Bank of America/Merrill Lynch, which outbid Wells Fargo & Co. and Citigroup Inc.

Grossman, Patrick, Senate President Therese Murray and House Speaker Robert DeLeo — all Democrats — pointed to several recent initiatives that impressed the credit rating agencies, including a bill intended to rein in public pension costs that was approved by the Senate last week and which DeLeo said would be debated in the House within 2-3 weeks.

Patrick has also proposed using a portion of a surplus from the fiscal year that ended July 1 to make a $300 million deposit into the state's "Rainy Day" fund, which if approved would make Massachusetts one of only four states with reserves exceeding $1 billion.

"We’re able to be in the market, at a good price, to raise the money, to make the investments that create the jobs, and to improve the lifestyle and the outlook for the people of the commonwealth," the governor said.

Patrick, a friend and supporter of President Obama, said the cooperation among state officials on financial matters contrasts with partisan bickering in Washington where, he said, "You have a small but vocal and influential minority in Congress who are apparently willing to drive the economy over a cliff."

With additional reporting by the WBUR Newsroom