OLYMPIA – Washington’s outstanding credit ratings, which were recently affirmed, helped generate strong investor interest today, as the Office of the State Treasurer competitively sold $1,114,310,000 in bonds. The low interest rates achieved during the sale of Washington’s highly-rated bonds will save the state millions of dollars over the term of the loans, in the form of low debt costs.
“Washington continues to be an attractive investment option thanks to sound financial management, a healthy state economy, and strong projected revenues,” said Washington State Treasurer Mike Pellicciotti. “Thanks to leadership from the Legislature this session, Washington can continue to count itself among the top tier of states, meeting the needs of our residents today while maintaining stability in our long-term financial outlook.”
Last week, after in-depth reviews, the top three rating agencies affirmed the state’s impressive bond ratings. Moody’s Investors Service affirmed the highest possible rating of “Aaa”, while Fitch and S&P both maintained their “AA+” ratings. In addition, all three rating agencies provided a “stable outlook” for the state.
During the most recent legislative session, the Legislature adhered to a set of financial recommendations that were provided by the Treasurer, with a goal of maintaining the state’s excellent credit ratings. These recommendations included maintaining sufficient reserves, keeping debt service payments low relative to revenues, and continuing to fund our state’s public pensions at a high level.
Proceeds from this week’s bond sales will be used to fund approximately six months of capital budget expenditures and a number of important transportation projects.
The capital budget projects include K-12 school renewal and replacement projects, facilities for state universities and community and technical colleges, community-based and state facilities projects, affordable housing units, water supply, flood protection, habitat conservation and rehabilitation projects, outdoor recreation facilities, riparian protection projects, farmland preservation, clean energy projects, and basic infrastructure projects.
The transportation projects include High Occupancy Vehicle lane improvements in Tacoma on Interstate 5, improvements to the Interstate 90 and State Route 18 interchange, and the location, design, right-of-way, and the construction of transportation projects or improvements that are identified as Connecting Washington transportation projects or improvements.
Sale Summary:
Various Purpose General Obligation Bonds (VPGO), Series 2024A
The $682,590,000 VPGO Bonds Series 2024A are being issued to provide funds to pay and reimburse state expenditures for various capital projects. Due to its large size, the bonds were divided into two tranches, to be sold as more digestible “Bid Groups”.
The state received 7 bids for the $341,840,000 sold as Bid Group 1 (maturities 2027-2040). Underwriter BofA Securities submitted the winning bid with a True Interest Cost (TIC) of 3.256147%.
The state received 7 bids for the $340,750,000 sold as Bid Group 2 (maturities 2041-2048). Underwriter Citigroup Global Markets Inc. submitted the winning bid with a TIC of 4.185333%.
On a combined basis, the $682,590,000 Series 2024A VPGO Bonds sold at a final aggregate TIC of 3.825166%. The final maturity date for Series 2024A VPGO Bonds is August 1, 2048.
Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation Bonds, Series 2024B
The state received 7 bids for the $376,615,000 Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation Bonds, Series 2024B, which have a final maturity date of June 1, 2048. Underwriter BofA Securities submitted the winning bid with a final TIC of 3.822668%.
General Obligations Bonds, Series 2024T (Taxable)
The state received 12 bids for the $55,105,000 General Obligation Bonds, Series 2024T (Taxable), which have a final maturity date of August 1, 2027. Underwriter KeyBanc Capital Markets submitted the winning bid with a final TIC of 4.794124%.