The Office of the State Treasurer received strong demand from bidders in Wednesday’s competitive sale of $603.0 million of Various Purpose General Obligation Bonds and $90.2 million of Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation Bonds thanks largely to Washington’s strong credit ratings.
“I want to once again thank my talented team at the Treasurer’s office for saving Washingtonians tens of millions of dollars through effective bond management,” said State Treasurer Mike Pellicciotti. “By avoiding peak interest rates and securing low financing costs, Washington is better positioned to weather economic volatility in years ahead.”
Source: Refinitive TM3 10-year AAA GO Municipal Market Data spot yield
Last week, top rating agencies analyzed Washington’s finances and 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 impressive “AA+” ratings. In addition, all three rating agencies provided a “stable outlook” for the state.
Proceeds from this week’s bond sale will be used to fund approximately six months of capital budget projects, including capital expenditures for affordable housing, K-12 public school construction, higher education facilities, highway improvements, conservation and farmland preservation, and other state-managed projects.
Sale Summary:
Various Purpose General Obligation (VP GO) Bonds, Series 2023B
The $603,020,000 VP GO Bonds, Series 2023B 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 three tranches, to be sold as more digestible “Bid Groups”.
The State received nine bids for the $158,870,000 sold as Bid Group 1 (maturities in 2024-2033). BofA Securities submitted the winning bid with a True Interest Cost (TIC) of 2.17%.
The State received eight bids for the $226,950,000 sold as Bid Group 2 (maturities in 2034-2042). Wells Fargo Bank, National Association submitted the winning bid with a TIC of 3.45%.
The State received seven bids for the $217,200,000 sold as Bid Group 3 (maturities in 2043-2048). J.P. Morgan Securities LLC submitted the winning bid with a TIC of 4.02%.
On a combined basis, the $603.0 million Series 2023B bonds sold at an aggregate TIC of 3.56%. The final maturity date for Series 2023B is February 1, 2048.
Motor Vehicle Fuel Tax and Vehicle Related Fees General Obligation (MVFT/VRF GO) Bonds, Series 2023C
The $90,165,000 MVFT/VRF GO Bonds, Series 2023C are being issued to provide funds to pay and reimburse state expenditures for construction of state and local highway improvements and preservation projects identified in the transportation budget, including improvements to SR 99 through Seattle, improvements to Interstate 90 at Snoqualmie Pass East, and improvements to the North Spokane Corridor of U.S. Highway 395.
The State received seven bids for the MVFT/VRF GO Bonds, Series 2023C, which have a final maturity date of June 1, 2048. HilltopSecurities submitted the winning bid with a TIC of 3.56%.