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Eye On Boise

Tue., July 16, 2013, 3:18 p.m.

State gets record-low interest rate on its annual short-term borrowing

Idaho got the lowest interest rate on its annual sale of $500 million in Tax Anticipation Notes this year since it started issuing the one-year notes in 1983, state Treasurer Ron Crane announced today. The state’s yield, or net expense, on the notes came in at 0.19 percent. Last year’s sale earned a 0.23 percent yield, “so .19 is very cheap,” said Shawn Nydegger, an investment officer in the treasurer’s office. The lower interest rate means the state will save $380,000 in interest costs for the year.

Though interest rates have been trending up, municipal bond rates have stayed low, and Idaho’s sterling credit ratings allowed it to get even more favorable rates. This year’s TAN issue actually had a coupon rate of 0.20, but bond buyers paid a premium up-front to get the notes, taking the net expense for the state down to 0.19.

“Idaho paper is extremely valuable in the marketplace because investors know they will get paid back,” Crane said. “This is because we have a track record of managing our finances well.” Idaho’s current credit ratings from the three major rating services is the top one available; click below for Crane’s full statement.

State Treasurer: Idaho Gets Lowest Interest Rate in History of the State and Since Tax Anticipation Notes (TAN) were first issued in 1983

Moody’s, Fitch and S&P Rating Continue to Give Idaho Top Rating


July 16, 2013 (Boise, Idaho) — Idaho State Treasurer Ron Crane announced that besides the fact that Idaho continues to receive the highest possible rating from Moody’s, Fitch and S&P, based on the conservative approach of the state they are now on record with the lowest interest rates in the history of the Gem State.


“Having the excellent credit rating is critical to keeping Idaho’s financial house in order.  That credit rating has led to the lowest interest rates we’ve ever seen. Our office, teamed with a legislature and the Governor’s office all have the same approach to keep our budget balanced and spend within our means,” Crane said.  


Following the sale of $500 million in TAN notes Treasurer Crane stated “I am thrilled with the historic low interest rate we were able to acquire on the 2013 notes. It is a reflection of Idaho’s conservative fiscal policy which allows us to borrow at such a low interest rate in an environment of rising interest rates.”


“Idaho paper is extremely valuable in the marketplace because investors know they will get paid back. This is because we have a track record of managing our finances well,” he continued. 


The Treasurer explained “when revenues are down we cut expenses to match those

revenues.”  “When revenues are up, we tuck money away in our savings (rainy day) accounts. It’s not always politically popular to operate this way but the rating agencies and the marketplace love the way we handle our money,” he said.


Idaho has issued Tax Anticipation Notes since 1983.  The proceeds from the sale of these one-year notes are used to level out cash flows throughout the fiscal year, especially when revenues lag expenses by a significant margin. 


For example, by mid-November expenditures have reached 60% of the appropriated budget, while at the same time only 40% of revenues have been received.  The proceeds from the TAN keep the general fund in the black during this timeframe.


Most of Idaho’s revenue comes in during the fourth quarter, particularly when income taxes come due on April 15th.  These fourth quarter revenues are then pledged to repay the notes.  After the note repayment account is fully funded the balance goes directly to the general fund.


The ratings from each of the services are as follows: Moody’s – MIG 1, Standard & Poor’s – SP1+, Fitch – F1+, which are the equivalent of an AAA rating.


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Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

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