$1 Billion Borrowing Plan Sold at Competitive Rate

SPRINGFIELD -- Governor George H. Ryan today announced that the State borrowed $1 billion at an attractive 1.43 percent to help the state pay overdue bills. The State today received a total of 44 bids on the four separate maturities that total $1 billion in short-term certificates, sold through a competitive bidding process. The low winning bids for the four pieces were submitted by Bank One, Goldman Sachs, J.P. Morgan and Lehman Brothers.

The State will repay the certificates on or before June 15, 2003. Funds from the certificate sale will be on hand July 23, 2002.

"With the money the State receives from this borrowing, we can catch up on overdue bills to vendors, including health care providers, and pay income tax refunds," Governor Ryan said.

On June 28, the Governor reached an agreement with Treasurer Judy Baar Topinka and Comptroller Dan Hynes for the State to borrow $1 billion. The agreement of all three officials is required for the State to do short-term borrowing.

The certificates were attractive to investors due in part to the credit ratings on the certificates. All three credit rating agencies gave the certificates their highest possible rating for short-term debt.

On Wednesday, the State will sell its first, long-term general obligation bonds of the new Fiscal Year in a negotiated sale led by UBS PaineWebber Inc.

All three rating agencies also recently have reaffirmed the State's long-term general obligation bonds credit rating. Fitch Ratings maintained its AA+ rating, noting in its comment that the State had enacted an "austere budget." Standard & Poor's maintained its AA rating, highlighting the State's "adequate financial condition and moderate debt levels." Moody's Investors Service also maintained the State's AA rating, and commented that with "very restrained spending" in the adopted fiscal year 2003 budget, the State has restored structural balance between revenues and expenditures after revenue shortfalls in the past year.