ANNAPOLIS, Md. (AP) — Maryland completed its effort to borrow $512.4 million Wednesday by selling general obligation bonds, getting a good response from investors despite the financial uncertainty churning around the debt limit debate in Washington.
Maryland Treasurer Nancy Kopp reacted with relief and confidence to the investor response, after Maryland and four other states were warned last week by Moody’s Investors Service that their triple-A bond ratings could be lowered if the nation’s bond rating is downgraded.
“We are the first triple-A state to go out since this business started in Washington,” Kopp said, referring to the state’s reaching out to the bond market. “Thus far, I am very happy to say the investors, particularly Maryland investors but all others have been able to tell the difference between the state of Maryland and some people down Route 50, and they’re investing in us.”
Virginia, South Carolina, Tennessee and New Mexico also were warned about their triple-A status, if the nation’s bond rating is downgraded.
Maryland sold about $72 million in direct retail bonds on Monday, after a three-day delay due to the debt limit debate in Washington. The state sold the other bonds during a Board of Public Works meeting on Wednesday.
Kopp said the state has decided to put off the sale of $200 million in refinancing bonds, because interest rates are so unstable that the state couldn’t make enough money from them now.
Comptroller Peter Franchot described the dilemma in Washington as a sobering illustration that what happens in the nation’s capital has a huge effect on Maryland. He said the state can’t afford to become too dependent on the federal government for the its economic well-being.
“I hope state leaders from both parties will use this wake-up call to rededicate ourselves to a business climate that inspires, promotes and rewards private sector investment in Maryland, regardless of the size of the employer or the business sector they happen to represent,” Franchot said just before the bond sale.
After the board meeting, Gov. Martin O’Malley said a default by the federal government would have a negative impact on all 50 states, and he blamed conservative members of Congress for the lack of a compromise so far.
“If the narrow wing of the Republican Party in Congress, call them the tea party members, are able to push Congress into this economic suicide pact of defaulting, of not having the United States pay its bills for the first time in history, that’s going to ripple through every single state,” said O’Malley, who is chairman of the Democratic Governors Association.
The governor also said it remains to be seen how badly default would hurt the nation, because default would be unprecedented. As for backup plans in case of default, O’Malley said states still don’t know what checks might be withheld from the federal government.
“So it’s not possible at this point for us to make contingency plans like that,” O’Malley said.
Meanwhile, a spokesman for Republican Rep. Andrew Harris said the congressman was receiving more than double the calls to his congressional office than usual.
Ryan Nawrocki, Harris’ spokesman, said on a normal day the congressman’s office receives about 100 calls from constituents. On Wednesday, he said, the office was on track for 200 to 300 calls.
“It’s surprising,” Nawrocki said. “We’re getting a lot of people who are saying, `Hold the line.’ I was expecting it to be a little more mixed or in the other direction. We’re from a pretty center-right district in Maryland, and the calls that we’re getting reflect the kind of district we represent.”
Harris represents the Eastern Shore and counties northeast of Baltimore.
(Copyright 2011 by The Associated Press. All Rights Reserved.)