For immediate release:  March 3, 1999
For more information:  Barton Potter (360) 902-9033

State Finance Committee Saves State $5.1 Million in Bond Refunding

This sale resulted in a savings of $5,102,277 net present value or about $450,000 per year in debt service savings.  “This is excellent savings considering our current interest environment,” said State Treasurer and Committee Chairman Mike Murphy.  Under State Finance Committee (SFC) policies, the minimum acceptable ratio of present savings to new issue size for advanced reftmding issue is 5 percent.  The above sale has a savings ratio of 5.48 percent.

The SFC passed resolution 885 on March 2, 1999, which provides for the sale of $93,120,000 State of Washington Various Purpose General Obligation Refunding Bonds, Series R-99A.  Bonds issued under the date of February 1, 1992, with an average coupon rate of 5.86 percent are currently callable on February 1, 2002.  This rate compares to the refunding bonds issued at a rate of 4.7925 percent.  Proceeds from the bonds sold will be held in escrow until the February 1, 2002 call date.  At that time they will be paid out to retire the February 1, 1992 bonds.

The SFC received four competitive bids and accepted the lowest bid, which was presented by Merrill Lynch & Co.  The SFC is comprised of Chairman Murphy, Governor Gary Locke and Lieutenant Governor Brad Owen.

Competitive bids were received from the following underwriters:  Merrill Lynch & Co offered the lowest bid at 4.7925 percent, followed by Salomon Smith Barney at 4.81109 percent, Goldman Sachs at 4.8197 percent, and Bear Stems at 4.8335 percent.  All bids are calculated at a true interest cost.

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