Washington will sell more than $500 million of bonds in a competitive sale Wednesday that will finance transportation, education and other capital projects across the state.
The Pacific Northwest state benefits from an economy growing faster than the rest of the country and strong budget control as it goes to the market, according to ratings agencies.
The deal is split into three: $262.9 million in various purpose general obligation Series 2019A; $93.4 million in motor vehicle fuel tax general obligation Series 2019B; and $145.8 million in taxable general obligation Series 2019T bonds.
Bidding will start Wednesday at 7:30 a.m. PDT for the Series A, 8 a.m. for Series B and 8:30 a.m. for the Series T.
Foster Pepper is the bond counsel and Montague De Rose and Associates and Piper Jaffray are the municipal advisors.
The bonds were assigned AA-plus ratings from Fitch Ratings, Aa1 from Moody’s Investors Service and AA-plus from S&P Global Ratings.
“Washington's rating outlook is stable, reflecting economic gains that are boosting revenues, a strong reserve position, and budget balancing solutions that are largely recurring,” Moody’s analysts said in a Aug. 15 report. “We expect that the state will continue to address any budget gaps that emerge, as it has in the past.”
Fitch affirmed the state’s AA-plus general obligation rating earlier this month and called its outlook stable.
The rating agency said the ratings “reflect the state's solid economy and revenue growth prospects, a demonstrated commitment to fiscal balance, and combined long-term liabilities that place a low burden on resources despite an above-average debt load. Fitch believes that strong budget control will allow the state to continue to address challenges while maintaining fundamental financial flexibility even at times of economic and revenue decline.”
Washington typically issues new money bonds twice a year in addition to refunding bonds based on market conditions, according to the Washington state treasurer’s website.
The state currently has $20.1 billion outstanding in bonds and over the past four years issued $2.2 billion to $3.7 billion per year, the office said.
“We expect healthy demand for our upcoming sale,” State Treasurer Duane Davidson said in a statement. “The state’s strong credit should be a source of pride for Washingtonians, as well as an important asset to protect, as it allow us to finance capital projects at very low interest rates.”
The Series A bond will fund a variety of projects including class size reduction for kindergarten through third grade, K-12 school repair and replacement and college and university facilities, according to the preliminary official statement. Water supply, flood protection, habitat protection, recreation facilities, riparian protection and farmland preservation projects will also get money from the proceeds.
The Series B bond will go towards the state’s transportation plan such as improvements on major highways and interchanges in Seattle, Snoqualmie Pass East and the North Spokane corridor. The Series T bond will fund non-transportation related capital projects.
