An interest rate of 3.7 percent is tied to the $550 million in general obligation bonds the state of Illinois sold Thursday for infrastructure needs.
The interest rate is a record low for general obligation bonds of its type, according to the Rauner administration. In January, the state borrowed $440 million for road construction and other transportation-related costs at a 4 percent interest rate.
The latest $550 million in borrowing will cover road construction as well as transportation and infrastructure projects.
But, as a result of the budget impasse, the Illinois General Assembly will have to grant the state permission to spend most of the bond sale's proceeds.
UPDATE (06/17/16): An analysis of the state's $550 million bond sale shows that Illinois faced a hefty penalty in the bond market because of its "deteriorating fiscal condition."
The analysis is from Martin Luby with the University of Illinois Institute of Government and Public Affairs. It shows that Illinois "received $70 million less for this bond sale than it would have received ten years ago, and $12 million less than it would have received six months ago."
Additionally, Luby says Illinois will have to borrow much more than in previous years to address the state's growing infrastructure needs.
"A recent estimate of the annual bond amount needed to address these needs is $4 billion," he wrote. "At this $4 billion annual bond level, the financial condition penalty estimate will be in the hundreds of millions based on 2006 relative pricing levels and tens of millions of dollars based on the state's relative bond prices only six months ago."