State Treasurer Creates Significant Savings by Refunding Bonds
OLYMPIA, WA – On Wednesday, the Washington State Treasurer’s Office, on behalf of the State Finance Committee, sold $410.7 million dollars of refunding bonds, producing over $50.5 million dollars in debt service savings for the state over seven years.
The refunding bonds were offered through negotiated sale to refinance $458.1 million of debt issued in 2010. The sale was comprised of two series: the $222.0 million of Various Purpose General Obligation (VP GO) Bonds, Series R-2020C and $188.7 million of Motor Vehicle Fuel Tax (MVFT) General Obligation Bonds, Series R-2020D.
“We were fortunate that the market afforded us the opportunity to accomplish this refinancing and save the state a considerable amount of money,” Treasurer Davidson said.
To provide the state with additional flexibility to deal with the economic impact caused by the ongoing COVID-19 pandemic, the refunding bonds were structured to move a significant amount of debt service savings earlier, with $33.1 million, or over half of the debt service savings occurring in FY 2021.
The Treasurer’s Office originally planned to sell these bonds in March. However, the municipal bond market suffered considerable volatility, essentially shutting down for several weeks due to the economic uncertainty caused by COVID-19. As a result, the Treasurer’s Office, with support from its financial advisors, elected to postpone the sale until more favorable conditions returned in April.
The VP GO refunding resulted in $29.3 million, or 11.80% in present value debt service savings. These bonds relate to capital projects like schools, hospitals, and construction for higher education. The MVFT GO refunding, which relates to highway-related transportation projects, resulted in $20.5 million, or 9.78% in present value debt service savings.
“My office is frequently exploring ways to save taxpayer dollars through refunding opportunities such as this. We were pleased with the results of the sale, and will continue to work on creating additional debt service savings for the state in the future,” Treasurer Davidson said.
The underwriting syndicate was led by Wells Fargo Securities. Co-managers were Academy Securities, BofA Securities, Goldman Sachs & Co. LLC, and UBS.