The Office of Treasurer Erick Russell

The Year in Review

During Fiscal Year 2022, the Debt Management Division actively managed the State’s $26.5 billion debt portfolio. Significant accomplishments included:

  • New Money Bonds - A total of $2.0 billion of new money bonds were issued to continue funding of the State’s capital programs including local school construction grants, economic development initiatives, transportation infrastructure, improvements at the state universities and colleges, and Clean Water and Drinking Water grants. These projects help bolster the local economy and improve the lives of all Connecticut citizens.
  • Refunding Bonds - The Division also issued a total of $568.9 million of refunding bonds for the General Obligation program that will provide aggregate debt service savings of $59.0 million over the remaining life of the bonds. The Division closed two other “forward refunding” transactions of General Obligation and Special Tax Obligation bonds that were sold in fiscal year 2021 but closed in fiscal year 2022, achieving additional refunding savings of $83.9 million over the remaining life of the bonds.
  • Credit Ratings – During the year, Connecticut continued to build its fiscal health including large budget surpluses, additional deposits to the Budget Reserve Fund, and significant additional contributions to the State’s two major pension systems. In May 2022, Treasurer Wooden and the Office of Policy and Management’s Secretary Beckham and staff met with the four major bond rating agencies through video conference calls. In recognition of the State’s continued financial improvement, S&P Global Ratings raised its credit rating outlook on the State’s General Obligation, Special Tax Obligation, and UConn 2000 bonds as well as other related bonding programs from “Stable” to “Positive” in May 2022.
  • Industry Leadership - Continuing its market leadership, Connecticut sold its third issue of “Social Bonds” in December 2021. These three Social Bond issues, totaling $881 million, were self-labeled and were sold consistent with the International Capital Markets Association’s Social Bond Principles. The proceeds will finance the State’s school construction grant program, which is a socially progressive program as it provides significantly higher reimbursement rates to more needy communities.
  • General Obligation Bond Sales – The Division’s first General Obligation bond sale of the fiscal year occurred in December 2021 with an $800 million new money offering including $300 million of Social Bonds. This sale was significant as it marked a continual trend of narrower bond pricing spreads, which indicates investor confidence in the State’s bonds. General Obligation bond spreads had widened in recent years due to investor concerns over the State’s long-term pensions and low budget reserves but have been moving back to more historic levels as pension reform measures were adopted and reserve levels reached an all-time high. The Division’s second General Obligation sale in May 2022 had the highest amount of retail orders ever recorded—$1.7 billion of retail orders received during a one-day retail order period following improvement in the State’s credit outlook to “Positive” by S&P Global Ratings.
  • Transportation Bonding Program – In November 2021, the Division managed the issuance of $500 million of new money Special Tax Obligation bonds to fund new and ongoing transportation infrastructure improvements and achieved a low 2.15% borrowing cost for the program. The bond sale provided total funding of $587 million for statewide transportation infrastructure investments. Throughout the year, the Division continued to consult with the State’s Department of Transportation and the Office of Policy and Management on bonding matters including various funding sources and alternative financing strategies related to the transportation bonding program.
  • University of Connecticut – The Division worked in conjunction with the University of Connecticut to offer a $227.2 million new money UConn 2000 bond sale that funded $260 million for projects within the University system.
  • State Revolving Fund (SRF) (Clean Water and Drinking Water Fund) - The Division worked closely with the State’s Department of Energy and Environmental Protection and the Department of Public Health to successfully commit low-cost funding for program participants throughout the State. Given the very low level of interest rates, the Division developed new policies and procedures to more effectively manage Clean Water loan prepayments in a manner designed to mitigate long-term impacts on the Fund while being fair to municipal borrowers.
  • Quasi-Public Agencies – Frequent interfaces with the State’s quasi-public agencies continued as the Division worked with several agencies on debt issuance and refundings that require Treasurer approval and State disclosure. During fiscal year 2022, this included five series for CHFA totaling $596 million and one series for CHESLA totaling $75 million.
  • Staffing and Vendor Searches - The Division was active in enhancing staffing and systems and completing vendor searches during the year. In response to the retirements of two key long-term Principal Debt Management Specialists, two experienced industry professionals were hired to fill those openings and enhance the capabilities of the Division. The Division selected two firms to provide new debt management computer systems, and the project funding was approved by the State’s IT Capital Investment Committee. In addition, the Division completed a bond counsel Request for Proposals resulting in new vendor contracts effective January 1, 2022.