Better luck with bond sales

With an economic outlook that has legislators picking their brains for solutions, a slight silver lining appeared when the state had better luck selling bonds than it did last year.

The Minnesota Management and Budget Office sold $400 million worth of bonds in three competitive sales Jan. 13. The bond sale raises money for capital projects, including college classrooms, prisons and road projects.

Kathy Kardell, assistant commissioner with the office’s Treasury Division, told the House Capital Investment Finance Division Jan. 13 the sale would have normally occurred in October, but was deferred until now because of poor market conditions. The state received an interest rate of 3.5 percent, which would have been 5 percent in October.

With concerns over the recent closures of some high-profile banks, like Lehman Brothers, Rep. Greg Davids (R-Preston) asked, “What happens if one of these companies goes down?”

Kardell said she doesn’t think there’s any risk. Using Lehman Brothers as an example, she said the bonds they had were sold immediately to other investors. Merrill Lynch bought $325 million worth of the bonds sold this week.