2005 Connecticut Code - Sec. 3-20a. Redemption or repurchase of bonds. Additional security.

      Sec. 3-20a. Redemption or repurchase of bonds. Additional security. (a) Provisions of this section shall apply to general obligation bonds or notes issued pursuant to section 3-20, special tax obligation bonds or notes issued pursuant to sections 13b-74 to 13b-77, inclusive, abandoned property fund bonds issued pursuant to section 3-62h, Clean Water Fund bonds or notes issued pursuant to section 22a-483, Bradley International Airport bonds or notes issued pursuant to sections 15-101k to 15-101p, inclusive, unemployment compensation bonds or notes issued pursuant to sections 31-264a and 31-264b, UConn 2000 bonds or notes issued pursuant to sections 10a-109a to 10a-109y, inclusive, and Second Injury Fund bonds or notes issued pursuant to section 31-354b and sections 8 and 9 of public act 96-242*.

      (b) The State Treasurer may obtain from a commercial bank or insurance company authorized to do business within or without this state a letter of credit, line of credit or other liquidity facility or credit facility for the purpose of providing funds for the payments in respect of bonds, notes or other obligations required by the holder thereof to be redeemed or repurchased prior to maturity or for providing additional security for such bonds, notes or other obligations. In connection therewith, with the authorization of the State Bond Commission, the State Treasurer may enter into reimbursement agreements, remarketing agreements, standby bond purchase agreements and any other necessary or appropriate agreements on behalf of the state. The State Bond Commission may, at its discretion, authorize the State Treasurer to pledge the full faith and credit of the state, to the extent the full faith and credit of the state is pledged to secure the bonds or notes for which the liquidity or credit facility is obtained, or to pledge the collateral that secures the applicable bonds or notes, to the state's payment obligations under any agreement entered into pursuant to this section. As part of the contract of the state with the other parties to any agreement entered into pursuant to this section for which the full faith and credit of the state is pledged to the state's payment obligations under such agreement, appropriation of all amounts necessary for the punctual payment of the obligations of the state under any such agreement is hereby made and the State Treasurer shall pay such amounts as the same become due. The initial costs of such agreements may be paid from the accrued interest and premium received on the sale of such bonds.

      (c) In connection with or incidental to the carrying of bonds or notes or in connection with or incidental to the sale and issuance of bonds or notes, the State Treasurer, with the authorization of the State Bond Commission, may enter into such contracts as the State Treasurer may determine to be necessary or appropriate to place the obligation of the state, as represented by the bonds or notes, in whole or in part, on such interest rate or cash flow basis as the State Treasurer may determine, including without limitation, interest rate swap agreements, insurance agreements, forward payment conversion agreements, futures contracts, contracts providing for payments based on levels of, or changes in, interest rates or market indices, contracts to manage interest rate risk, including without limitation interest rate floors or caps, options, puts, calls and similar arrangements. Such contracts shall contain such payment, security, default, remedy and other terms and conditions as the State Treasurer may deem appropriate and shall be entered into with such party or parties as the State Treasurer may select, after giving due consideration, where applicable, for the creditworthiness of the counter party or counter parties, including any rating by a nationally recognized rating agency, the impact on any rating on outstanding bonds or notes or any other criteria as the State Treasurer may deem appropriate, provided the unsecured long-term obligations of the counter party is rated the same or higher than the underlying rating of the state on the applicable bonds or notes by at least one nationally recognized rating agency. The State Bond Commission may, at its discretion, authorize the State Treasurer to pledge the full faith and credit of the state, to the extent the full faith and credit of the state is pledged to secure the applicable bonds or notes, or to pledge all of any part of the collateral that secures the applicable bonds or notes, to the state's payment obligations under any contract entered into pursuant to this section. As part of the contract of the state with the other parties to any agreement entered into pursuant to this section for which the full faith and credit of the state is pledged to the state's payment obligations under such agreement, appropriation of all amounts necessary for the punctual payment of the obligations of the state under any such agreement is hereby made and the State Treasurer shall pay such amounts as the same become due. The initial costs of such contracts may be paid from the accrued interest and premium received on the sale of such bonds.

      (P.A. 88-319, S. 4, 7; June Sp. Sess. P.A. 91-4, S. 2, 25; P.A. 98-124, S. 2, 12; P.A. 04-216, S. 61.)

      *Note: Sections 8 and 9 of public act 96-242 are special in nature and therefore have not been codified but remain in full force and effect according to their terms.

      History: June Sp. Sess. P.A. 91-4 deleted language referring to a single payment and replaced it with language referring to "payments in respect" of "notes or other obligations" in addition to bonds and further deleted "If the state is required to draw upon any such credit facility to redeem bonds prior to maturity, the state shall repay the amount of each loan made pursuant to such credit facility within one year from the date it is incurred from the proceeds of refunding bonds, notes or other obligations or from any other available funds.", substituting "As part of the contract of the state with the other parties to any agreement entered into pursuant to this section, appropriations of all amounts necessary for the punctual payment of the obligations of the state under any such agreement is hereby made and the treasurer shall pay such amounts as the same become due; P.A. 98-124 added new Subsec. (a) to list provisions to which section shall apply, designated existing text as Subsec. (b) and added new Subsec. (c) to authorize interest rate swap agreements by the State Treasurer with the approval of the State Bond Commission, effective May 27, 1998; P.A. 04-216 amended Subsec. (a) to make section applicable to abandoned property fund bonds, effective May 6, 2004.