District of Columbia Sale Nets Record Rate

WASHINGTON — The District of Columbia achieved an historically low interest rate on its recent sale of 25-year bonds, as part of a heavily oversubscribed offering of $776 million of income tax-secured revenue bonds this week, the office of the chief financial officer announced Tuesday.

The 3.16% rate is even lower than the rates for the federally-subsidized Build America Bonds sold in 2009 and 2010, the office said.

The district received orders for more than $2.5 billion, three times the size of the offering, pushing the interest rate down to 3.16%. District residents bought more than $130 million of the bonds and demand was so strong that the two-day sale was completed in a single day.

"We are grateful for this vote of confidence in the district's bright future and in my administration's commitment to fiscal responsibility," said Mayor Vincent Gray.

Chief financial officer Natwar Gandhi is especially proud of the income tax bonds, which carry a higher rating than the city's general obligation debt. The success of these bonds, which were first issued in 2009 and now make up the largest single chunk of the district's debt, are one factor Gandhi credits in helping turn around the city's historically poor fiscal record.

"The district's strong financial position was confirmed once again by the great demand for our bonds and the very low interest rates we are  paying," Gandhi said. "The money that we save on interest payments becomes available to meet the city's other critical needs."

Jack Evans, who chairs the committee on finance and revenue of the District of Columbia's council, also lauded the sale results.

"The success of these bond sales is another indication of why our city is so admired around the country for the success of its financial policies," Evans said. "We are in better financial shape than most other major cities in the nation."

Gandhi's office also announced that the $675 million of one-year notes the district sold at the end of October were hugely oversubscribed and yielded a rate of .19%. Last year, the district's notes achieved a .27% rate.

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