It is enacted by the General Assembly as follows:

SECTION 1. Section 35-8-27 of the General Laws in Chapter 35-8 entitled "Bonded Indebtedness of State" is hereby amended to read as follows:

35-8-27. Variable rate obligations 35-8-27. Variable rate obligations and interest rate exchange agreements. -- 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.

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, specifically, known as interest rate "caps", "floors", or "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 such 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.

SECTION 2. This act shall take effect upon passage.