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On March 6, 2013, Maryland competitively sold $665.135 million in general obligation bonds to institutional investors. In light of reduced retail demand for the State's bonds due to the current low interest rate environment, a retail component was not offered for this sale. The State Treasurer's office will reassess market conditions to determine if a retail component will be included in its next sale which is currently expected in July or August 2013.
If you are interested in buying bonds, you may want to know what Maryland does with the proceeds from its general obligation bond sales, the security for these bonds and the bond ratings. Maryland does not use general obligation bond proceeds to close budget gaps or to fix cash flow problems. You can see what these bonds finance as you drive throughout the State and see the construction of State facilities; the construction by local governments of public schools, community colleges, and jails and correctional facilities; and the construction of hospitals, cultural and other projects. In fact, since 2007, Maryland has used more than 60% of the proceeds of its general obligation bonds to finance the construction of public schools and higher education facilities in the State. I believe that these investments in education have contributed to the January 2012 recognition by Education Week of Maryland's public education system as the highest ranking in the country for the fourth year in a row.
Maryland’s general obligation bonds are secured by the full faith and credit of the State. At least since the end of the Civil War, the State has paid the principal and interest on its general obligation bonds when due. Maryland is one of nine states with AAA ratings from all three rating agencies. The states are Maryland, Delaware, Virginia, North Carolina, Georgia, Missouri, Iowa, Utah and Alaska. On February 25 and 26, 2013, Moody’s Investors Service, Standard & Poor’s (S&P) and Fitch Ratings all affirmed the State’s AAA rating.
Moody’s has assigned a negative outlook to Maryland's General Obligation Bonds. In its latest confirmation of Maryland's Aaa rating dated February 25, 2013, Moody's stated that the negative outlook on Maryland's Aaa rating is due to Maryland's indirect linkages to the weakened credit profile of the U.S. government, which itself was assigned a negative outlook by Moody's on August 2, 2011. Moody’s has determined that issuers with such indirect linkages, such as Maryland, have some combination of economies that are highly dependent on federal employment and spending, a significant healthcare presence in their economies, have direct healthcare operations, or high levels of short-term and puttable debt.
Thank you again for learning about Maryland’s general obligation bonds. To learn about future sales, periodically visit this site. In addition, other Maryland bond issuers may offer bonds in the interim. To see prospective sales dates, there is a Maryland bond sale calendar you can access here.
Continuing financial information for the State of Maryland general obligation bonds is available at http://www.treasurer.state.md.us/debtmanagement/continuing-disclosure.aspx and at http://emma.msrb.org, where market activity related to the bonds may also be found. General information on municipal bonds can be accessed at the Municipal Securities Rulemaking Board's Education Center, http://emma.msrb.org/EducationCenter/EducationCenter.aspx