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Washington, DC, Sells $1.2 Bln in Bonds

By Munichain News Desk

Washington, DC, issued $1.18 billion in bonds to finance capital improvement projects and refund previously issued securities.

The city sold the bonds in four series, including one set of federally taxable bonds. The tax-exempt bonds, totaling $933.6 million, mature between 2024 and 2048, yielding between 3.29% and 4.34%. The taxable bonds, totaling $250.3 million, mature between 2025 and 2037, yielding between 4.887% and 5.403%. The securities received a rating of AA+ from Fitch Ratings, Aa1 from Moody’s Investors Service, and AAA from S&P Global Ratings.

The rating “reflects strong legal provisions, strength and resiliency of the structure and the District’s unique position under federal law,” Fitch analysts wrote.

The issuance follows Moody’s downgrade of Washington’s outlook from stable to negative, mirroring a similar downgrade in the outlook of overall U.S. government debt. The rating agency cited the city’s “economic, financial, capital market and governance linkages to the federal government” as reasons for the downgrade.

Moody’s analysts added that a downgrade to U.S. government debt would cause a similar change to Washington’s rating “because of the District’s sensitivity to federal spending cuts, dependence on federal transfers and exposure to capital markets disruption.”

The bonds will finance the city’s capital improvement plan, which calls for $10 billion in spending through 2029. Most of that funding is concentrated in transportation and schools improvements. 

The bond proceeds will also refund securities the city issued in 2014 and 2015.

The bonds are special obligations of the city, payable by pledged income tax revenues.

Citigroup Global Markets Inc served as lead underwriter on the issuance.

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