DEBT ADMINISTRATION

The State finances many of its major capital needs by issuing bonds. Some of this debt is general obligation debt backed by the full faith, credit and taxing power of the State. Much of the debt, however, is revenue bonds and notes associated with specific State agencies and discretely presented component units. Specific revenue flows of particular agencies and discretely presented component units service revenue debt.

Moody's Investors Service has rated South Carolina's general obligation bonds as "Aaa," representing the highest rating awarded; Fitch Investors Service, Inc., rates these bonds as "AAA." After many years of "AAA" ratings, Standard & Poor's lowered the State's rating on general obligation bonds to "AA+" on January 29, 1993. On July 9, 1996, Standard & Poor’s returned its rating on the State’s general obligation bonds to "AAA" citing "continued improvement in the State’s financial position and commitment to sound budgetary discipline."

During the fiscal year ended June 30, 1996, South Carolina issued $190.910 million and retired $79.690 million in general obligation bonds payable by governmental funds. Of the amount issued, $50.000 million were State highway bonds. The State budgets and pays principal and interest on capital improvement bonds from current resources of the Budgetary General Fund. The Department of Transportation Special Revenue Fund pays the debt service on highway bonds. At June 30, 1996, the Higher Education Funds reported State institution general obligation bonds outstanding of approximately $41.900 million.

The State's available legal debt margin at June 30, 1996, was $48.100 million for institution bonds. State law limits annual debt service expenditures rather than directly limiting the amount of outstanding debt for general obligation bonds/notes. The annual debt service margin at June 30, 1996, was $53.524 million for highway bonds and $66.836 million for general obligation bonds excluding institution and highway bonds.

Net general obligation bonds/notes outstanding per capita (which excludes general obligation bonds payable from Higher Education Funds) is a useful indicator to citizens, investors and management of the State's debt position. The following table shows this amount at June 30 for the last three years:


The General Services Fund, an Internal Service Fund, issued lease revenue bonds during the fiscal year ended June 30, 1995. There were $6.672 million of these limited obligation bonds outstanding at June 30, 1996.

The primary government's higher education institutions and enterprise entities had revenue bonds, notes, and certificates of participation of $1.278 billion outstanding on June 30, 1996. Revenue bonds, notes, and certificates of participation outstanding (expressed in thousands) by agency were:


During the fiscal year ended June 30, 1996, the Education Assistance Authority refunded $5.575 million in Student Loan Revenue Bonds to gain flexibilities provided by the 1993 bond resolution. The University of South Carolina advance refunded $2.000 million in Parking Revenue Bonds to gain flexibilities provided by the new bond resolution and to reduce the University’s total debt service payments over the next six years by approximately $15 thousand. The University will obtain an economic gain (difference between the present values of the debt service payments on the old and new debt) of $32 thousand. For additional details, see Note 11 in the Notes to the Financial Statements.

In addition, discretely presented component units had the following amounts of bonds outstanding (expressed in thousands) at June 30, 1996:


During its fiscal year ended December 31, 1995, the Public Service Authority (Santee-Cooper) advance refunded $313.835 million in Revenue Bonds to reduce its total debt service payments over the next twenty-seven years by approximately $57.034 million and to obtain an economic gain of approximately $22.361 million. For additional details, see Note 11 in the Notes to the Financial Statements.