OLYMPIA – Touting a newly assigned ‘positive’ credit rating outlook from S&P, the Office of the State Treasurer (OST) today sold $663,845,000 of Various Purpose General Obligation bonds (VPGO), and $265,995,000 of Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation bonds (MVFT/VRF GO) through a competitive sale.
“Washington continues to draw strong interest from investors thanks to our commitment to sound fiscal policy and exceptional Treasury management. We are moving in the right direction to keep debt costs low and ultimately save taxpayer dollars,” said State Treasurer Mike Pellicciotti. “Today’s success was possible thanks to outstanding preparation from our Debt Management team as we remain committed to ensuring the state’s bonds are issued at the lowest possible rates in a dynamic interest rate environment.”
Credit rating agencies cited Washington’s strong economy and effective budget management practices as they reaffirmed the state’s high credit ratings in January, which contributed to the favorable interest rates achieved today.
S&P Global Ratings revised its outlook to ‘positive’ from ‘stable’ earlier this month as it affirmed its AA+ rating on the state of Washington’s VPGO and MVFT/VRF GO bonds. S&P noted in the latest credit rating report that there is a one-in-three chance the agency could raise Washington’s rating to the top level of AAA over the next two years.
Moody’s Investors Service issued the highest possible rating of Aaa with a ‘stable’ outlook, while Fitch maintained an impressive AA+ rating also issuing a ‘stable’ outlook.
In addition to the state’s new money bonds, since the beginning of 2021, OST has generated $532.2 million in net present value savings by refinancing previously issued debt to lock in lower interest rates.
Sale Summary:
Various Purpose General Obligation (VPGO) Bonds, Series 2024C
The $663,845,000 VPGO bonds were issued to provide funds for various state capital budget projects, including K-12 school renewal and replacement projects; State and community-based facilities projects; affordable housing units; facilities for State universities and community and technical colleges; and water supply, flood protection, habitat conservation and rehabilitation projects. Given the size of the transaction, the offering was broken into two “bid groups” to encourage bidder participation.
Big Group 1: The State received six bids for the $329,330,000 VPGO bonds (maturities 2025-2040) with underwriter BofA Securities submitting the winning bid with a True Interest Cost (TIC) of 3.17%.
Bid Group 2: The State received six bids for the $334,515,000 VPGO bonds (maturities 2041-2049) with underwriter BofA Securities submitting the winning bid with a TIC of 4.25%.
On a combined basis, the VPGO bonds produced a TIC of 3.87%.
Motor Vehicle Fuel Tax and Vehicle Related Fee General Obligation (MVFT/VRF GO) Bonds, Series 2024D
The $265,995,000 MVFT/VRF GO bonds were issued to provide funds for transportation projects authorized by the Legislature including improvements to the Interstate 90 and State Route 18 interchange, and the location, design, right-of-way, and construction of projects identified in the Connecting Washington transportation package.
The State received six bids for MVFT/VRF GO bonds (maturities 2025-2049) with underwriter BofA Securities submitting the winning bid with a True Interest Cost (TIC) of 3.86%.