Harrisburg, PA – Today, Shapiro Administration Secretary of the Budget Uri Monson announced the successful sale of approximately $1.159 billion in General Obligation refunding bonds, which will be used towards the refinancing of approximately $1.23 billion of outstanding bonds. This refinancing follows the reaffirmation of Pennsylvania’s highest-in-a-decade credit ratings by Moody’s, Fitch, and S&P, citing the Commonwealth’s strong fiscal management, solid financial position, and steady economic growth under Governor Josh Shapiro’s leadership.
Bond refinancing of prior-year debt will save Commonwealth taxpayers millions in debt service over the remaining life of the bonds. This year’s issuance alone will generate $71.5 million in gross debt service savings and $52.5 million in net present value (NPV) savings. When combined with the refunding of bonds completed in December 2023 and October 2024, Pennsylvania taxpayers will benefit from $193 million in total savings over the next decade — a result of the Shapiro Administration’s ongoing efforts to manage debt prudently.
“With two credit upgrades in two years and a clear commitment to responsible budgeting, the Shapiro Administration is saving taxpayers money and strengthening the Commonwealth’s financial future,” said Secretary Monson. “This refinancing not only reduces our long-term debt burden — it also protects Pennsylvania from future risks and frees up resources to invest in education, infrastructure, and economic development. The Shapiro Administration will continue to be prudent stewards of the Commonwealth’s resources.”
As part of this refinancing, the Commonwealth successfully retired the remaining bonds from the First Series B of the 2010 Build America Bonds (BABs). Originally issued under the American Recovery & Reinvestment Act to stimulate the economy during the financial crisis, BABs included a 35 percent federal subsidy on interest payments to issuers — a subsidy that has been eroded by federal budget sequestration every year since 2013 and remains vulnerable to future cuts. By refinancing these bonds with traditional tax-exempt debt, the Commonwealth eliminates its exposure to further federal reductions and shields taxpayers from rising interest costs.
The Commonwealth took a multi-series approach to this sale, receiving eight total bids from four different bidding entities across the two series. The refunding achieved an NPV savings rate of 4.28 percent — exceeding the Commonwealth’s target threshold of 3 percent, as outlined in its Debt Management Policy.
This refinancing follows a 2024 credit rating upgrade by Moody’s Ratings to Aa2 from Aa3, which cited “sound fiscal management,” “balanced budgets,” and “steady economic growth” as key reasons for the improved rating. That upgrade marked the second in less than two years, following a similar upgrade to AA from AA- by Fitch Ratings in 2023, and a positive outlook from S&P Global Ratings, which affirmed its A+ long-term rating.
The higher credit rating has ripple effects across the Commonwealth — including through Pennsylvania’s School District Intercept Program, which allows participating school districts to borrow at lower rates by leveraging the Commonwealth’s credit. More than 150 school districts benefit from the program, meaning lower debt costs and more resources for classrooms and students.
By locking in these savings and reducing financial risk, the Shapiro Administration continues to deliver long-term value for Pennsylvania taxpayers while making smart investments in the Commonwealth’s future.
For more information on Governor Shapiro’s 2025-26 budget proposal, visit shapirobudget.pa.gov.
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