SECTION 38C. Investments; bonds or notes; contracts; powers of state treasurer; payments to constitute general obligations

In connection with or incidental to the acquisition or carrying of any investment or program of investment or carrying of bonds or notes, the state treasurer, after consultation with the state finance and governance board established under section 97 of chapter 6, may enter into such contracts as the state treasurer may determine to be necessary or appropriate to place the investment or obligation of the commonwealth, as represented by the bonds or notes, investment or program of investment and the contract or contracts, in whole or in part, on such interest rate or cash flow basis as the treasurer may desire, 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 stock or other indices, contracts to exchange cash flows or a series of payments and contracts to hedge payment, rate, spread or similar exposure, including without limitation interest rate floors or caps, options, puts and calls. Such contracts shall contain such payment, security, default, remedy and other terms and conditions as the state treasurer, after consultation with the finance advisory board, may deem appropriate and shall be entered into with such party or parties as the state treasurer, after consultation with the finance advisory board, may select, after giving due consideration, where applicable, for the creditworthiness of the counterparty or counterparties, including any rating by a nationally recognized rating agency or any other criteria as may be appropriate. Scheduled, periodic payments to be made by the commonwealth under any such contract in existence on August 1, 2008 or any such contract related to bonds or notes of the commonwealth which shall be entered into by the state treasurer after August 1, 2008 shall constitute general obligations of the commonwealth to which the full faith and credit of the commonwealth shall have been pledged. The state treasurer may expend amounts received under this section without further appropriation to make payments under this section or to pay debt service on debt obligations of the commonwealth, including, without limitation, by funding escrow accounts for the payment of such debt service.