Interest rates jump on some state debt

DavidIngram — Wed, 24 Sep 2008 18:11:33 -0400

The credit shortage is having an impact on the state's monthly debt payment.

Sara Lang, spokeswoman for the State Treasurer's Office, said Wednesday that the variable interest rates on about $855 million in state debt have gone up the last two weeks. Those rates are now almost five-fold what they were two weeks ago.

For about $500 million, the rate was 1.68 percent two weeks ago. It went up to 4.57 percent a week ago and to 7.58 percent this week.

For about $355 million, the rate was 1.58 percent two weeks ago. It went up to 4.46 percent a week ago and to 7.49 percent this week.

Lang said the difference in the monthly debt payment will be about $1.4 million more than it would have been if the rates had stayed the same. The state budget assumes a 4 percent interest rate, she said, blunting any immediate impact on taxpayers.

"We continue to be hopeful that, if a federal solution presents itself, the markets will settle down and these rates will settle down," Lang said. "We'll continue to watch the situation very closely."

The $855 million in variable-rate debt is about 12 percent of the state's total debt.

Lang said there has been no impact yet on the sale of any state bonds. The last sale was Aug. 12 for $200 million to finance various state construction projects. Lang said another sale is not expected until the spring.

newsobserver.com projects - Interest rates jump on some state debt - Comments

Interest rates jump on some state debt