The Office of Treasurer Erick Russell

The Year in Review

During Fiscal Year 2024, the Debt Management Division actively managed the State’s $25.7 billion debt portfolio. Significant accomplishments included:

  • New Money Bonds - A total of $2.2 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 issued a total of $176.2 million of refunding Social Bonds for the General Obligation program that will provide aggregate debt service savings of $24.4 million over the remaining life of the bonds. The Division also issued $349.0 million of refunding bonds for the Special Tax Obligation (Transportation) program that will provide aggregate debt service savings of $26.4 million over the remaining life of the bonds refunded. Finally, the Division also issued $133.5 million of refunding bonds for the UConn 2000 program that will provide aggregate debt service savings of $10.8 million over the remaining life of the bonds refunded.
  • Credit Ratings – Alongside prudent debt management, Connecticut continued to bolster its fiscal health including budget surpluses, deposits to the Budget Reserve Fund, and additional contributions to the State’s two major pension systems. Building on the credit rating upgrades that were achieved in FY23, (Standard & Poor’s raised its credit rating on the State’s general obligation from “A+” to “AA-” and Kroll Bond Ratings raised its credit rating from “AA” to “AA+”), in May 2024, Moody’s Investors Service and Fitch Ratings affirmed their credit ratings of the State’s general obligation (Aa3 and AA- respectively) but changed their outlooks from “stable” to “positive”. This outlook change sends a signal to investors that both rating agencies see positive trends and will be reviewing the State’s credit ratings for possible upgrades within the next 18-24 months. 
  • Industry Leadership - Continuing its market leadership, Connecticut sold two additional series of Social Bonds in January 2024. These six Social Bond issues, totaling $1.5 billion, 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 January 2024 with a $650 million new money offering including $250 million of Social Bonds. In June 2024, the Division sold a second issue of General Obligation bonds consisting of $250 million of new money taxable bonds and $200 million of new money tax-exempt bonds. This sale was significant as the State achieved its lowest bond pricing spread in 13 years for the 20-year bonds, thanks to investor confidence and recent credit rating upgrades.
  • Transportation Bonding Program – In November 2023, the Division managed the issuance of $875 million of new money Special Tax Obligation bonds to fund new and ongoing transportation infrastructure. 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. As a result of these discussions, the legislature approved a proposal to reduce outstanding debt in the Special Transportation Fund expected to result in debt service reductions of over $22.0 million in Fiscal Year 2025 and over $60.0 million a year for the subsequent nine years. Certain outstanding STO bonds will be paid off early from a portion of the surplus in the Special Transportation Fund. The result will be annual cost savings from outstanding bonds maturing over the next ten years being removed from the State’s balance sheet, freeing up hundreds of millions of dollars that can be used to finance future transportation projects.
  • University of Connecticut – The Division worked in conjunction with the University of Connecticut to offer an issuance of $97.0 million University of Connecticut Special Obligation Student Fee Revenue Bonds to fund new residential housing projects on the UConn Storrs campus. In addition, the Division and the University managed the issuance of $224.5 million General Obligation bonds to fund various capital improvements across the UConn 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. The Division collaborated with DEEP to develop a short-term, limited additional subsidy for strategically targeted Clean Water Fund Construction Projects in Distressed Communities Policy which provide forgivable loans from the Clean Water Fund.
  • General Obligation GAAP Bonds - The State’s outstanding General Obligation GAAP Bonds were retired early with $211.7 million in 2023 surplus funds. These bonds were fully redeemed on their October 15, 2023 call date and are now removed from Connecticut’s balance sheet. As a result, $27.1 million in interest costs will be avoided.
  • Quasi-Public Agencies – Frequent interfaces with the State’s quasi-public agencies continued as the Division worked with several agencies on debt issuance and refunding that require Treasurer approval and State disclosure. During fiscal year 2024, this included seven series of bonds for CHFA totaling $1.0 billion and one series for CHESLA totaling $27.6 million.
  • Staffing and Vendor Searches - The Division implemented succession planning initiatives by hiring a Debt Management Specialist who is shadowing all four of the State’s major debt programs, and an Assistant Treasurer who shadowed the retiring Assistant Treasurer for Debt Management and subsequently assumed the position on August 1, 2024.