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Washington State Maintains Moody’s Aaa Rating in latest Bond Sale

In its first bond sale of the year, the Office of the State Treasurer announced this week that it sold $512.7 million of Various Purpose General Obligation Bonds at an interest rate of 2.39%, locking in one of the lowest, if not the lowest interest rates for long-term general obligation bonds in State history.

While Moody’s Investors Service, one of the leading credit rating agencies, downgraded or set negative outlooks for several local and state governments recently after a year of COVID economic woes, Washington maintained its stable Aaa rating. The State has also maintained its AA+/AA+ ratings with stable outlooks from S&P Global and Fitch Ratings.

Washington relies on bonds to help fund major capital and transportation projects. The legislature directs the Office of the State Treasurer to issue this debt, and the State Treasurer works diligently to sell these bonds at the lowest possible interest rate to help minimize state financing costs. Generally, a strong credit rating reflects greater confidence in Washington’s long-term financial health, resulting in increased demand to buy Washington bonds, and more favorable interest rates for the state.

“The demand to invest in Washington State remains high,” said State Treasurer Mike Pellicciotti after approving this week’s bond sale. “Maintaining our stable and strong credit ratings has kept Washington moving forward, while saving taxpayers hundreds of millions of dollars in borrowing costs compared to other states,” said Pellicciotti.

Thanks in part to the Office’s debt management division, the state’s relatively well-funded pensions, a strong economy, along with the legislature’s willingness to maintain strong financial reserves; the State was upgraded to a Aaa credit rating by Moody’s two years ago.

“Thanks to responsible budget writers, their continued commitment to the rainy day fund, and our strong economic foundations, as well as the exceptionally talented Debt Division here in the Treasurer’s Office, investors have confidence in Washington’s future.” said Pellicciotti.

Examples of projects to be financed through proceeds from this week’s sales range from building affordable housing, assisting with school construction costs, and improving flood protection, to the construction of state highway transportation projects.

Sale Summary:

Various Purpose GO Bonds, Series 2021C

Due to its large size, the Treasurer’s Office divided the 2021C Series into two components and sold each portion as individual “Bid Groups.”

  • Bid Group 1, which included $258.0 million maturing from 2022 through 2037, received 7 bids. BofA Securities, Inc. submitted the winning bid with a true interest costs (TIC) of 1.4174%. The next lowest bid was incredible close, with an interest rate that was only 0.00088% higher.
  • Bid Group 2, was comprised of $260.1 million maturing from 2038 to 2046 and received 7 bids. BofA Securities, Inc. also won this bid with a TIC of 2.8683%. The higher TIC is indicative of the longer maturities of this bid group, which are priced at higher interest rates than shorter maturities.

Motor Vehicle Fuel Tax GO Bonds, Series 2021D

The state received 9 bids for the $107.7 million MVFT GO Bond Series 2021D, which mature from 2022 to 2046. J.P. Morgan Securities LLC submitted the best bid with a TIC of 2.0715%. The next lowest offer was just 0.0050% higher.

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

The state received 7 bids for the $234.8 million MVFT/VRF GO Bonds Series 2021E. The winning bid was submitted by BofA Securities, Inc. with a TIC of 2.3522%. The difference between this and the second lowest bid was also very close—only 0.0061%.

For additional information visit the sale results page.