State of New Jersey
Department of the Treasury
For Immediate Release
May 4, 2011
For Information Contact:
Andrew Pratt or Bill Quinn
(609) 633-6565
Governor’s Common-Sense Fiscal Management Reassures
Investors, Saves Taxpayers Millions on Transportation Bonds
“Rally Rolls on as New Jersey Deal Sells in One Day.” The Bond Buyer
“New Jersey Saves $20 Million in Borrowing Costs.” Bloomberg News
Investor enthusiasm for New Jersey transportation bonds allowed the state to save tens of
millions of dollars in long-term interest costs on a $600 million sale of bonds for critical
transportation projects, Treasurer Andrew Sidamon-Eristoff is pleased to announce.
“Demand was overwhelming, allowing the state and its banks to sell all our bonds in one day
rather than the two days usually required for a sale to retail and institutional investors. In
addition, state bonds were sold at yields far better than their underlying ratings, which is
extremely good news for taxpayers,” Sidamon-Eristoff said. “It’s gratifying that investors
recognized that Governor Christie’s fiscal policies have put the state’s finances back on track,
making New Jersey debt a safe and exceptionally attractive investment opportunity.”
Treasury’s public finance professionals, working on behalf of the Transportation Trust Fund,
offered bonds with maturities ranging from two to 30 years. Once the sale began yesterday
morning, it became clear that investors wanted to buy far more bonds than New Jersey planned
to sell.
The extremely high demand allowed New Jersey to greatly reduce the cost of borrowing for
state taxpayers. For example, investors were expected to demand yields of about 5.77 percent
yesterday from sellers of transportation bonds with 30-year maturities, Bloomberg News
estimated. Instead, New Jersey was able to sell $217.8 million of 30-year bonds at a yield of
5.47 percent. That highly favorable yield will save taxpayers nearly $20 million in debt service
payments over the life of the 30 year bonds, compared to the 5.77 percent rate cited by
Bloomberg, the Treasurer pointed out. Similar savings were generated on bonds sold with
shorter maturities.
“Competent, hands-on management of large bond sales like this one is critical to helping
Governor Christie get the state’s fiscal house in order,” the Treasurer said. “Treasury is firmly
committed to providing the governor with that management.”
In recent commentaries on New Jersey debt, Moodys Investors Service pointed out that
pension and benefit costs are a drag on state finances, but noted that reforms proposed by the
Governor Christie and awaiting legislative action could significantly reduce the state’s pension
liability over the long run. In addition, the governor’s proposed employee health benefit
reforms would provide “immediate, positive budgetery impact.” Both Fitch Ratings and
Standard & Poor’s have mentioned the positive effects that adoption of the governor’s pension
and benefit reforms would have on the state’s fiscal outlook. The Governor continues to urge
the Legislature to act on these reforms.
“Clearly, the state cannot afford to ignore the critical need for pension and benefits reform,”
the Treasurer said. “Investors recognize that no one has offered an alternative to the
governor’s plan that will provide benefits of the same order of magnitude to both the pension
plans and the state budget. Yesterday’s bond sale clearly indicates that investors believe the
governor will succeed in his effort to reform the state’s antiquated and unsustainable systems
for providing pensions and benefits to public employees.”