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February 23, 2011

State Successfully Sells $3.7 Billion of General Obligation Bonds to Fund Employee Pensions
Second Largest Bond Sale by State of Illinois

CHICAGO – The Governor’s Office of Management and Budget of the State of Illinois today is pleased to announce the successful sale of $3.7 Billion in taxable General Obligation Bonds at an average rate of 5.56% to be deposited into the Pension Contribution Fund.  Funds from these bonds will reimburse or fund the State’s required deposit to its pension systems for fiscal year 2011.  The bonds will have an 8 year final maturity with principal payments of $100 million due in 2014, $300 million in 2015, $600 million in 2016, and $900 million due annually from 2017 through 2019.

“This strong demand has led to a lower than anticipated interest rate which will save the state tens of millions of dollars over the life of the bond,” said David Vaught, Director of the Governor’s Office of Management and Budget.  “Investors have expressed confidence in the actions taken by the Quinn administration to tackle the state’s budget challenges that have been created over decades of fiscal mismanagement.”

A total of 128 individual American, European, and Asian investors purchased these bonds.  Purchasers included large bond funds, sovereign wealth funds, global insurance companies, banks and hedge funds.  Demand exceeded $6 Billion with more than $520 Million in demand from international investors.  The oversubscription resulted in an attractive all in cost of funds for the state. 

Thirteen banks participated in this transaction including Goldman Sachs, Loop Capital and Morgan Stanley who served as Joint Book Running Senior Managers.  Mesirow Financial and William Blair served as Senior Manager. Peralta Garcia Solutions served as financial advisor to the State in connection with this financing.

“The fact that we had significant domestic and international demand for this bond offering reflects the markets view on the improved fiscal condition of Illinois.” said John Sinsheimer, Director of Capital Markets for the Governor’s Office of Management and Budget. 

This is the State's second issuance of medium term notes for its pension system.


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