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WA Sells $930 Mln in Bonds

By Munichain News Desk

The state of Washington issued $929.8 million in bonds to finance a variety of capital improvement projects.

The state sold the bonds in two series. The Series 2024C bonds, consisting of $663.8 million, mature between 2025 and 2049, yielding between 2.57% and 3.94%. The Series 2024D bonds, consisting of $266 million, also mature between 2025 and 2049, yielding between 2.57% and 3.96%. All of the bonds pay interest at 5%. The securities received a rating of AA+ from Fitch Ratings, Aaa from Moody’s Investors Service, and AA+ from S&P Global Ratings, which revised the state’s outlook to positive.

The rating reflects ”the state’s broad and growing economy, with solid long-term revenue growth prospects, as well as the state’s demonstrated commitment to fiscal balance and long-term liabilities that place a low burden on resources,” Fitch analysts wrote.

Washington’s economy has grown in recent years, buoyed by a surging technology sector and an increasing population. The state is home to the headquarters of tech giants including Amazon and Microsoft. Its population has grown to 8 million people, up from 7 million in 2014, according to census data.

Population growth, and Washington’s unique method of education funding, have at times strained the state’s finances. Unlike many other states, Washington uses a formula to fund schools from the top-down, rather than from the local level. Funding is generally based on enrollment and directed by state officials, though school districts can still use local tax revenue for certain programs. This funding process, which supporters say creates a more equitable distribution of resources, has added pressure to state budgets.  

“Education poses continued spending pressure for the state given steady population growth and the state’s role as the primary funding source for K-12 schools,” Fitch analysts wrote.

The Series 2024C bonds will finance upgrades to public schools, affordable housing initiatives, flood protection plans, and other projects. The Series 2024D bonds will support highway improvement projects.

The bonds are general obligations of the state, backed by its full faith and credit. The Series 2024D bonds are also supported by fuel taxes and motor vehicle fees.

BofA Securities, Inc served as underwriter on the issuance, purchasing the bonds for more than $1 billion. The price reflected a premium of more than $100 million. Montague DeRose and Associates, LLC and Piper Sandler & Co acted as municipal advisors.

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