Texas flexed its economic muscle once again announcing the sale of $9.8 billion in one year notes at the lowest interest rate in State history. The Texas Tax Revenue Anticipation Notes have a one year yield of 0.225 percent. The previous low was 0.27 percent on notes issued last year. By comparison, California sold a total of $10 billion one-year notes in May and June this year at 0.33 and .43 percent respectively. The record low yield demonstrates investors’ faith in the Texas economy and saves taxpayers money.
According to Comptroller Susan Combs, demand was very high for the security of Texas bonds. “Buyers bid about $24 billion, about two-and-a-half times the amount offered for sale, helping drive the interest rate down to its historic low. This strong sale showed that investors are very confident in the state’s economic growth and our record of conservative spending practices.”
The Texas Tax Revenue Anticipation Notes are used to assist school districts pay bills ahead of ISD tax collections. It is one of many different ways in which the State’s solid credit rating is used to lower borrowing costs for school districts. The State guarantees most ISD bond issues using the credit of the Permanent School Fund, which has a AAA rating.