Massachusetts issued $1.47 billion in bonds to finance general capital expenditures and refund a previous issuance.
The state sold the bonds in five series, ranging from $188 million to $550 million. Only the Series E bonds, consisting of $260 million, are federally taxable; the rest are tax-exempt. The securities received a rating of AA+ from Fitch Ratings, Aa1 from Moody’s Investors Service, and AA+ from S&P Global Ratings. In April, S&P upgraded Massachusetts’ credit rating from AA.
The rating reflects the state’s “considerable economic resources, adroit management of economic and revenue cyclicality and strong budget controls,” Fitch analysts wrote.
The issuance follows the passage in August of the state’s $56 billion budget for the upcoming fiscal year. The budget increased spending by more than 6% over the previous fiscal year.
The plan marked the first use of a new Massachusetts surtax on high-income earners. Last November, voters approved a 4% tax on personal income over $1 million, with proceeds earmarked for education and transportation. The tax raised $1 billion in its inaugural year, with $524 million earmarked for education and $477 million for transportation.
Massachusetts is the second-wealthiest state in the United States by per capita personal income. The bonds are general obligations of the state, backed by its full faith and credit.
BofA Securities, Inc, Jefferies LLC, Wells Fargo Bank, NA, and Morgan Stanley & Co LLC won separate competitive bids to purchase the bonds.