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Washington Attracts Multiple Bidders for Competitive Bond Sale

Treasurer Duane A. Davidson (left) and Deputy Treasurer of Debt Management Jason Richter (right).

Treasurer Duane A. Davidson (left) and Deputy Treasurer of Debt Management Jason Richter (right).OLYMPIA, WA – Washington State’s positive economic outlook and Aa1/AA+/AA+ bond ratings drew a strong field of investors for competitive bids on three series of bonds valued at more than $500 million on Wednesday. The sale of bonds will make funding available for State expenditures for various capital and transportation projects.

Series 2019A Sale Summary

The $262,535,000 Series 2019A Bonds attracted strong interest, with bids from five institutions. Citigroup Global Markets Inc. won the bid at a True Interest Cost (TIC) of 3.817594%. Bank of America Merrill Lynch, at a TIC of 3.820370% was the second lowest bidder of the five, which also included Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, and J.P. Morgan Securities LLC. The average life of the bonds is 19.635 years, with a final maturity date of August 1, 2043, and a delivery date of September 12, 2018.

Series 2019B Sale Summary

The $93,555,000 Series 2019B Bonds saw competitive bids from four institutions. Morgan Stanley & Co. LLC won the bid at a TIC of 3.614153%. Bank of America Merrill Lynch, at a TIC of 3.615469% was the second lowest bidder of the four, which also included Citigroup Global Markets Inc. and J.P. Morgan Securities LLC. The average life of the bonds is 15.158 years, with a final maturity date of June 1, 2043, and a delivery date of September 12, 2018.

Series 2019T Sale Summary

The $145,655,000 Series 2019T Bonds (taxable) brought in attractive bids from eight institutions. Citigroup Global Markets Inc. won the bid at a TIC of 3.335701%. Wells Fargo Bank, National Association, at a TIC of 3.423049% was the second lowest bidder of the eight, which also included Morgan Stanley & Co. LLC, Robert W. Baird & Co., Inc., J.P. Morgan Securities LLC, Bank of America Merrill Lynch, and Goldman Sachs & Co. LLC. The average life of the bonds is 6.849 years, with a final maturity date of August 1, 2031, and a delivery date of September 12, 2018.

On August 29, 2018 Treasurer Davidson signed the resolutions finalizing the sale of the bonds.

“I’m impressed with our debt management team, who really stepped up to the plate”

“We had a productive day, and overall the sale went very well,” said Davidson during the signing. “I’m impressed with our debt management team, who really stepped up to the plate to prepare us for today’s successful sale.”

Community Impact

Examples of projects to be financed with proceeds of the Various Purpose General Obligation Bonds, Series 2019A and General Obligation Bonds, Series 2019T (Taxable) include K-3 facilities supporting class-size reduction, K-12 school renewal and replacement projects, facilities for State universities and community and technical colleges, community-based and State facilities projects, water supply, flood protection, habitat conservation and rehabilitation projects, outdoor recreation facilities, riparian protection projects, and farmland preservation.

The Motor Vehicle Fuel Tax General Obligation Bonds, Series 2019B, will finance highway improvements and preservation projects that include improvements to SR 99 through Seattle, improvements to the I-5/SR 16 interchange, improvements to I-90 at Snoqualmie Pass East, and improvements to the North Spokane Corridor of U.S. 395.

“Because of Washington’s growing economy, strong industries, manageable debt load, and good overall money management — we were able to secure great ratings and attract outstanding bids for this sale,” said Treasurer Davidson.

Interest Rates

Interest rates, particularly in the short-end of the yield curve, have increased over the past year. However, from a historical perspective, rates continue to be relatively low, with the Bond Buyer 20-Bond Index (BBI) now standing at 3.94%, which remains below the 10-year average of 4.13% and the 30-year average of 5.12%. Favorable market conditions, combined with the State’s strong credit and conservative debt management practices helped to ensure the lowest possible borrowing costs for these bonds, which translates into cost savings for Washington tax payers.

“we’ll continue to do everything possible to maintain the State’s strong credit”

“With today’s sale finalized, we will begin looking toward our next issuance, and we’ll continue to do everything possible to maintain the State’s strong credit and ensure the lowest possible cost of capital for future financings,” said Davidson.