The recent refinancing of General Obligation Bonds, combined with last year’s refinancing, will save Pennsylvania taxpayers over $120 million over the life of the bonds, driven in part by two credit rating upgrades in Governor Shapiro’s first two years in office

The Commonwealth has achieved its highest credit rating in over a decade, thanks to the Shapiro Administration’s commitment to responsible financial management, a strong economy, and the bipartisan 2024-25 budget.

Harrisburg, PA – On Oct 17th, Shapiro Administration Secretary of the Budget Uri Monson announced the successful sale of approximately $1.395 billion in new General Obligation Bonds, along with a refunding issuance of $237.1 million to refinance approximately $248 million of outstanding bonds. This latest sale and refunding issuance come after Moody’s upgraded(opens in a new tab) the Commonwealth’s credit rating to its highest rating in over a decade last week.

Bond refinancing of prior year debt will save Commonwealth taxpayers millions in debt service over the remaining life of the bonds. This year’s issuance alone will generate $21.8 million in gross debt service savings and $18.1 million in net present value (NPV) savings – and when combined with the refunding of bonds executed in December 2023, Commonwealth taxpayers will benefit from $121.5 million in savings over the next 10 years.

In the short term, as a result of the improved credit ratings and outlooks secured by the Shapiro Administration in 2023 and 2024, Commonwealth taxpayers are expected to benefit roughly $10 – $20 million in savings on the new money issuances over the past two years – allowing the Shapiro Administration to potentially invest some of that money in key priorities like education, economic development, and public education.

“For two years in row, our responsible fiscal management has saved the Commonwealth and Pennsylvania taxpayers millions of dollars,” said Secretary Monson. “The recent Moody’s upgrade has many benefits – lower borrowing costs and allowing us to direct more funding toward essential programs for Pennsylvanians rely on to educate our kids, keep our communities safe, and grow our economy. The Shapiro Administration will continue to be prudent stewards of the Commonwealth’s resources.”

The Commonwealth utilized a multi-tranche approach to the debt issuances, selling the bonds across three separate bid groups, allowing for improved participation and competition amongst bidders and investors. Across the three tranches, the Commonwealth received a total of 15 bids, comprising 5 different bidding entities. The NPV savings from the bond refinancing equal to 7.291 percent of refunded par, more than double the Commonwealth’s target of 3.0 percent as established in its Debt Management Policy.

This bond sale follows a recent upgrade earlier this month by Moody’s Ratings(opens in a new tab) to Aa2 from Aa3, citing the Commonwealth’s “sound fiscal management,” balanced budgets, and “steady” economic growth. This is the second rating upgrade in less than two years, following a similar upgrade by Fitch Ratings(opens in a new tab) in 2023 to ‘AA’ from ‘AA-,’ and an outlook improvement from S&P Global Ratings(opens in a new tab), which improved the Commonwealth’s outlook from ‘stable’ to ‘positive’ while affirming its A+ long-term rating.

Additionally, Moody’s issued a release(opens in a new tab) earlier this week highlighting how the Commonwealth’s credit rating upgrade positively impacts the School District Intercept Program, benefiting over 150 Pennsylvania school districts by lowering their borrowing costs, resulting in more funds available for students.