State Treasurer Saves State $21.5 Million in Debt Service Costs
OLYMPIA, WA. – The Office of the State Treasurer State sold $144.5 million of refunding bonds to refinance bonds originally issued in 2009.
The Treasurer’s Debt Management division structured this sale to take advantage of the current market’s low interest rates and strong investor demand, aided by the State’s recent credit rating upgrade to save taxpayers millions of dollars.
Thanks in part to the State’s strong economy Washington received an upgrade to “Aaa” by Moody’s Investor Service in August, which helped pique interest from investors.
“We were very pleased by the strong investor demand we saw for the sale, which included more than 30% of the bonds being purchased by retail investors,” said Jason Richter, Deputy Treasurer of Debt Management.
With an interest rate of around 1.36%, the sale resulted in approximately $21.5 million in total debt service savings (or $20.6 million on a net present value basis), with $13 million allocated to the operating budget and $7.5 million allocated to the transportation budget.
Overall, the refinancing reduced annual debt service payments by an average of $3.0 million each year over the next 7 years, according to Deputy Treasurer Richter.
“My staff is constantly on the lookout for opportunities to save the State money and this refinancing is a good example of the excellent work that this office is doing,” State Treasurer Duane Davidson said.