(a)  In connection with the issuance of duly authorized bonds or notes of the state, notwithstanding any other authority to the contrary, such bonds or notes may be issued in the form of variable rate obligations, so-called. In connection therewith, the state, acting through the general treasurer, may enter into agreements with banks, trust companies or other financial institutions within or without the state, whether in the form of letters or lines of credit, liquidity facilities, insurance or other support arrangements. Any debt issued as variable rate obligations shall bear such terms as the general treasurer shall determine, including provisions for prepayment at any time with or without premium at the option of the state, may be sold at a premium or discount, and may bear interest or not and if interest bearing, may bear interest at such rate or rates variable from time to time as determined by such index, banking loan rate or other method specified in any such agreement. Any such agreement may also include such other covenants and provisions for protecting the rights, security and remedy of the lenders as may, in the discretion of the general treasurer, be reasonable and proper and not in violation of law. The general treasurer may also enter into agreements with brokers for the placement or marketing of any such debt or notes of the state issued as variable rate obligations.

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Terms Used In Rhode Island General Laws 35-8-27

  • Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
    • You are late making a payment or commit some other default, triggering an increase to a penalty rate
    • The bank changes the terms of your account and you do not reject the change.
    • The rate expires (if the rate was fixed for only a certain period of time).
  • Interest rate: The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
  • Variable Rate: Having a "variable" rate means that the APR changes from time to time based on fluctuations in an external rate, normally the Prime Rate. This external rate is known as the "index." If the index changes, the variable rate normally changes. Also see Fixed Rate.

(b)  In addition, the general treasurer, with the approval of the governor, may from time to time, enter into and amend interest rate exchange agreements including, but not limited to, interest rate “caps”, “floors”, “collars”, or “swaps” that the general treasurer determines to be necessary or desirable for the purpose of generating savings, managing an interest rate, or similar risk that arises in connection with, or subsequent to or is incidental to the issuance, carrying or securing of variable rate obligations, fixed rate bonds or fixed rate obligations. Such interest rate exchange agreements entered into by the state shall contain such provisions, including payment, term, security, default and remedy provisions, and shall be with such parties, as the general treasurer shall determine to be necessary or desirable after due consideration to the creditworthiness of those parties.

History of Section.
P.L. 1997, ch. 23, § 1; P.L. 2001, ch. 162, § 1; P.L. 2011, ch. 363, § 23.