PHOENIX - Washington will sell more than $900 million of bonds next week, including a retail sale of its first-ever green bonds Sept. 28 followed by a competitive sale Sept. 30.
The state will issue approximately $750 million new money general obligation bonds for governmental purposes and transportation projects and about $194 million of refunding bonds. The bonds carry ratings of AA-plus from Fitch Ratings, Aa1 from Moody's Investors Service, and AA-plus from Standard & Poor's.
Two days before the competitive sale, the state will issue a portion of the various purpose bonds as green bonds, said Washington deputy treasurer of debt management Ellen Evans. Proceeds will fund environmentally beneficial projects and programs to protect Puget Sound, rivers, lakes and aquatic lands; support habitat conservation, outdoor recreation and farmland preservation; increase energy efficiency and conservation; and reduce pollution in the state's water supply, she said. Once proceeds have been spent, the state will post a final list of projects and programs funded with proceeds of the bonds.
Bank of America Merrill Lynch is managing underwriter for the negotiated green bond sale.
"We're going to call them "evergreen bonds," Washington Treasurer James McIntire said. McIntire said that investors have heard about how buying bonds helps build up the state's infrastructure and schools, so this sale will be focused on the environmental investments Washington has been making.
"We thought they would find a little extra value in it," McIntire said.
McIntire said the state likes to offer a retail sale period to give local investors a crack at the bonds ahead of Wall Street. The home team doesn't have a tax advantage in Washington because the state doesn't have an income tax.
The treasurer added that the bonds will be coming to market at a good time for the state's economy, which outperforms the national economy thanks to the strong economic performance of the Puget Sound region and its strong tech economy. General state revenue for the 2015-17 biennium is expected to increase by more than 10% from the previous biennium, the state economist said recently. Potential risks include the potential for slower Chinese economic growth, a reduction in exports due to the stronger dollar, and the impact of stock market volatility, according to the state's investor presentation.
Washington also has long-term funding challenges in finding money for education. The state has been paying fines for failure to comply with a 2012 state Supreme Court ruling in which the court found that the state was not meeting a constitutional obligation to fully fund basic education and mandated $4.6 billion of new K-12 funding by 2018. Analysts have said the fines do not represent a threat to the state's reserves.
"We see a very positive outlook," McIntire said. "We're looking forward to a good sale."
