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Kentucky draws national attention for
nearly $400 million bond sale
Bold move during credit crunch expected to be followed by other states
FRANKFORT, Ky. (October 7, 2008) — Gov. Steve Beshear today announced that Kentucky has been able to sell nearly $400 million in bonds on Wall Street—a move that has garnered national attention because it is seen as pivotal to re-establishing activity in municipal credit markets.
Other states are expected to follow Kentucky’s action now in selling their bonds on Wall Street, Beshear said.
Beshear said Kentucky’s solid preparation for the bond sale sound fiscal management and willingness to take a chance that the credit markets would respond favorably were keys to the success of the bond sale.
"While the credit crisis in the United States remains serious, I am pleased that investors recognize the strong financial position of the commonwealth of Kentucky," Gov. Beshear said. “We can’t hunker down and wait for the national economy to improve. We’ve got to be aggressive about our economy and economic development. This is another step in that direction.”
The $390 million in funds from the bond sale will be used for capital projects including more than $114 million for projects at state institutions of higher education such as Kentucky State University, the University of Louisville, Morehead State and Western Kentucky University.
Other proceeds from the bond sale will be used to pay for economic development and infrastructure projects, including $100 million for the Infrastructure for Local Development Fund.
“While other states are encountering problems in obtaining short-term debt for cash flow purposes, Kentucky is able to tap into the market to fund our capital projects through the current fiscal year and hopefully beyond,” said Jonathan Miller, secretary of the Finance Administration Cabinet.
Morgan Stanley led a syndicate of 11 firms that underwrote the bonds. The syndicate, which includes both national and Kentucky firms, allows for the broadest possible distribution of the commonwealth's bonds to achieve the lowest possible cost of interest, 5.49 percent.
Kentucky's bond transaction received orders from individual investors in excess of $140 million to anchor the pricing of the deal. Of the orders, $250 million were received from a broad base of institutional investors including mutual funds, insurance companies and trust departments.
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