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Overwhelming Success for the State in Recent Bond Sale

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This week, the Office of the State Treasurer sold $645.4 million in bonds. The sale was comprised of Various Purpose General Obligation (GO) bonds, Taxable GO bonds, and Motor Vehicle Fuel Tax (MVFT) & Vehicle Related Fees GO bonds.

“I am very pleased with the strong reception that our bonds received, indicating a sincere desire from investors to continue as they did pre-coronavirus in making investments in the State of Washington,” Treasurer Davidson said.

The Bond Buyer, an independent publication for municipal finance professionals, called out the strong interest from investors on this sale, writing “Washington, the first state to report COVID-19 cases, ran with (an approximately) $650 million competitive deal that was well received and will be a bellwether for state general obligation debt and move benchmark yields in directions that indicate how bullish investors are in munis.”

Sale Summary:

 

Various Purpose GO Bonds, Series 2021A

The $493.9 million Series 2021A bonds are being issued to pay and reimburse State expenditures for various capital projects, such as K-12 school renewal and replacement projects, affordable housing units, habitat conservation and rehabilitation projects, outdoor recreation facilities, and farmland preservation.  Due to its large size, the bonds were divided into two tranches, to be sold as more digestible individual “Bid Groups.”

  • 11 bids were received for the $202.8 million Bid Group 1, which has bonds maturing in 2023 through 2035. BofA Securities submitted the winning bid with a true interest cost (TIC) of 1.4314%. The next lowest bid was only 0.0015% higher.
  • 10 bids were received for the $291.2 million Bid Group 2, which has bonds maturing in 2036 through 2045. Barclays won this bid group with a TIC of 2.9164%.
  • On a combined basis, the $493.9 million Series 2021A bonds had an aggregate TIC of 2.5080%. Spreads to the benchmark ranged from 0 to 16 basis points, the tightest spreads for these maturities going back to 2017.

Motor Vehicle Fuel Tax & Vehicle Related Fees GO Bonds, Series 2021B

  • 8 bids were submitted for the $115 million Series 2021B bonds which mature in 2021 through 2045 and are being issued to pay and reimburse State expenditures for construction of State and local highway improvements including Connecting Washington transportation projects. BofA Securities submitted the best bid with a TIC of 2.5027%. The next lowest offer was incredibly close, just 0.0013% higher. Spreads to the benchmark were very close to the spreads for the 2021A bonds, ranging from 1 to 18 basis points, again some of the tightest spreads the State has seen for some time.

General Obligation Bonds (Taxable), Series 2021T

The $36.5 million taxable Series 2021T bonds received 17 bids, the most offers the State has seen on a single series since 2005. The bonds mature in 2021 through 2023 and are being issued to pay and reimburse State expenditures for clean energy projects, affordable housing units, broadband and basic infrastructure projects. The winning bid for the series, was submitted by Wells Fargo Securities with a TIC of 0.3720%. The difference between this and the second lowest bid was only 0.0063%.