Tennessee's bond debt declines

Tennessee's bond debt declines

September 9th, 2012 by Andy Sher in News

Tennessee state Comptroller Justin Wilson

Photo by Associated Press/Times Free Press.

Tennessee's bonded indebtedness fell from $6.118 billion to $5.861 billion during a six-month period ending June 30 -- a difference of $257 million, according to officials.

"This report contains good news for the taxpayers of Tennessee," state Comptroller Justin Wilson said in a news release. "Our state has low debt, high credit ratings and well-managed finances."

Wilson noted that refinancing of some debt also "created a present value savings of $61 million. And the state maintained high bond ratings from the country's three major rating agencies."

Tennessee's long-term general obligation bonds went down by $77.5 million while shorter-term commercial paper went up $74.2 million. State School Bond Authority debt rose $58.1 million.

The biggest decrease occurred at the Tennessee Housing Development Agency, where mortgage loans and principal outstanding fell $260 million to $2 billion during the Dec. 31-June 30 period.

In response to Chattanooga Times Free Press questions, Wilson spokesman Blake Fontenay said the decrease in general obligation debt outstanding primarily was because of principal maturities and repayments.

"The increase in commercial paper outstanding is from short-term financing of capital projects [which eventually will be refinanced with long-term debt]," he said.

The THDA decrease in outstanding debt "was primarily due to bond principal maturities and mortgage prepayments that result in bond principal redemptions."

Because of low interest rates in the mortgage market, Fontenay said, "there are homeowners that are refinancing their homes at lower interest rates, which result in mortgage prepayments."

In 2011, Wilson told state lawmakers that Tennessee had one of the lowest general obligation bond debt burdens among states, at about $300 per person. While there are various measures on rankings, none places Tennessee higher than 46th.

Contact staff writer Andy Sher at asher@timesfreepress.com or 615-255-0550.