State Treasurer Saves $160.7 Million in Bond Sale, Highest Savings from Refinancing in Washington History
OLYMPIA – The Office of the State Treasurer (OST) sold $828,715,000 in Various Purpose General Obligation Refunding Bonds and $514,350,000 in Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation Refunding Bonds today, bringing the total net present value savings to the state generated by refinancings to a cumulative $484.8 million since 2021.
State Treasurer Mike Pellicciotti continues to prioritize refinancing transactions to reduce debt costs and keep taxpayer dollars working in Washington so they can go to critical services and social programs rather than being spent on higher interest payments. Today’s sale targeted the state’s callable bonds that recently became eligible for a tax-exempt refinancing. Including this week’s sale, Pellicciotti has directed the refinancing of $4,259,215,000 in previously issued debt, which created $484.8 million in net present value savings since 2021.
“The $160.7 million in present value debt service savings locked in with today’s sale is a clear sign we are doing things right when it comes to managing Washington’s public finances,” said Pellicciotti. “Washington continues to be a sound investment thanks to the outstanding team here at the Treasury and our effective stewardship of state dollars which helps keep our credit ratings high and our debt costs low.”
In January, Treasurer Pellicciotti delivered a set of financial recommendations to the Washington State Legislature intended to help keep the state’s outstanding credit ratings intact as the economy shows signs of cooling.
This month, credit rating agencies maintained Washington’s high ratings, contributing to the low interest rates the state achieved for this week’s bond sale. Moody’s Investors Service issued the highest possible rating of Aaa to Washington, while Fitch and S&P each issued a remarkable AA+ rating.
The ratings action from Moody’s cited the “positive underlying fundamentals of [Washington’s] economy and the state’s strong governance practices which will continue to support sizable reserves” as the key rationale for their reaffirmed rating.
Various Purpose General Obligation Refunding Bonds, Series R-2023A
The $828,715,000 VPGO Refunding Bonds Series R-2023A bonds are being issued to reduce the debt service cost of outstanding bonds that were previously issued to provide funds to pay and reimburse state expenditures for various capital projects. Due to its large size, the bonds were divided into three tranches, to be sold as more digestible “Bid Groups”.
The State received 5 bids for the $329,600,000 sold as Bid Group 1 (maturities 2023-2028). Underwriter BofA Securities submitted the best bid with a True Interest Cost (TIC) of 2.478090%.
The State received 6 bids for the $291,315,000 sold as Bid Group 2 (maturities 2029-2033). Underwriter BofA Securities submitted the best bid with a TIC of 2.419770%.
The State received 6 bids for the $207,800,000 sold as Bid Group 3 (maturities 2034-2038). Underwriter BofA Securities submitted the best bid with a TIC of 3.179435%.
On a combined basis, the $828.7 million Series R-2023A Refunding Bonds sold at an aggregate TIC of 2.761849%. The final maturity date for Series R-2023A Refunding Bonds is August 1, 2038.
Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation Refunding Bonds, Series R-2023B
The State received 5 bids for the $514,350,000 Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation Refunding Bonds, Series R-2023B, which have a final maturity date of July 1, 2042. Underwriter Morgan Stanley & Co, LLC submitted the best bid with a TIC of 3.088669%.