State officials have declared Michigan's first commercial paper program a success.

Patti Woodworth, director of the state's Department of Management and Budget, reported last week that the sale of $29 million of commercial paper on June 24 was accomplished at an interest rate of 2.2%.

She called the sale "extremely good news for the people of Michigan."

The commercial paper was issued by the State Building Authority, which received $650 million of new bonding authorization for capital projects at state colleges and universities under an economic stimulus plan approved by the legislature and signed into law earlier this year by Gov. John Engler.

Tom Saxton, the authority's executive director, said more commercial paper sales are planned for the next five years.

The authority plans to use commercial paper to fund the start-up costs of projects.

Once the projects are completed or near completion, the commercial paper win be replaced by long-term bonds backed by state lease payments to the authority.

"We're extremely happy with the interest rate," Saxton said, referring to the first sale.

"The program will offer us a lot more flexibility down the road and will be a good thing for the state," he said.

Morgan Stanley & Co. was the sole dealer for the authority's first issue.

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