The city of Washington D.C. sold $581 million in bonds (Series 2023A) to finance general capital expenditures and $239 million in bonds (Series 2023B) to refund a previous bond issuance.
The Series 2023A bonds mature between 2026 and 2048, with yields between 2.71% and 3.88%. The Series 2023B bonds mature between 2024 and 2030, with yields between 2.77% and 2.93%. Both issuances consisted of general obligation bonds, backed by the full faith and credit of the district. The bonds will also be supported by revenue from a municipal property tax.
The bonds received a rating of AA+ from Fitch Ratings and S&P Global Ratings and a rating of Aaa from Moody’s Investors Service.
“The District’s high-wage knowledge and services-based economy will continue to expand post pandemic and is positioned for future growth: employers are attracted to its highly educated workforce which will draw more workers,” Moody’s analysts Pisei Chea and Timothy Blake wrote. “The District has exemplary fiscal governance.”
The bond issuance comes as local leaders seek to continue to bolster the district’s fiscal standing. The city has a higher gross domestic product than 17 U.S. states, with its per capita income higher than any state’s.
Washington has low pension liabilities, and has already funded its additional retirement benefits, affording it financial flexibility, according to Moody’s.
Underwriters purchased the Series 2023A bonds for over $650 million, reflecting a premium of $69 million. They purchased the Series 2023B bonds for $259 million, reflecting a premium of $20 million. Morgan Stanley and Loop Capital Markets served as lead underwriters on the issuance.