Washington achieved better-than-expected spreads to triple-A benchmark yield curves on the $749.4 million general obligation deal it sold competitively Tuesday despite the recent choppiness in the market, according to Jason Richter, deputy treasurer for debt management.
BofA Securities won the first tranche of $199.1 million beating out seven other bidders with a true interest cost of 1.40%. The second tranche of $281.2 million saw seven bids with J.P. Morgan Securities submitting a top bid with a 2.68% true interest cost. BofA Securities won the final $269 million with a TIC of 3.30%, beating out six other bidders.
The aggregate TIC on the entire deal was 2.84%.
“We were very pleased with the strong interest, and the results of, [the] sale,” Richter said. “The State of Washington works very hard to maintain a top-notch credit and we attempt to structure our transactions in a consistent, predictable manner.”
On Tuesday, “this work paid off in the form of a very successful sale,” Richter said.
The spreads were similar to tighter on some maturities to what it achieved in November when it sold $266.38 million of GOs competitively. This week’s deal saw the 10-year with a 5% coupon bought at 1.54% (+8 Bloomberg BVAL), 5s of 2042 at 1.93% (+23) and 5s of 2047 at 2.04% (+23).
In its November deal, the 10-year with a 5% coupon was bought at 1.25% (+9) and the long bond on the deal, 4s of 2042, yielded 1.77% (+25).
Washington Treasurer’s Office
Ahead of the deal, Moody’s Investors Service affirmed an Aaa rating while S&P Global Ratings and Fitch Ratings affirmed AA-plus ratings. All assigned stable outlooks citing the state’s fiscal stability.
The state’s tax revenues increased by $2.8 billion in fiscal 2021 from fiscal 2020, reflecting continuing strength in property values and real estate sales, according to its latest annual comprehensive financial report. It saw growth in every revenue category: sales and use tax gained $1.51 billion, business and occupation tax rose $666.6 million and property tax revenue increased $225.1 million.
“Current and future Washingtonians in the decades ahead will benefit, because we have been able to finance these important school and community projects at the lowest possible cost today,” State Treasurer Mike Pellicciotti said.
The biggest beneficiary of the proceeds, roughly $200 million, will be K-12 projects, with a list of projects for universities and health administration buildings also to be funded by the bonds.