LOS ANGELES - AA-plus rated Washington is set to sell $717 million of general obligation bonds in a three-part competitive offering on Jan. 22.
The deal will include $355 million of various purpose tax-exempt general obligation bonds, $274 million of tax-exempt motor vehicle fuel tax general obligation bonds, and $88 million of taxable general obligation bonds.
The various purpose GO bonds will have maturities ranging from 2022 through 2039. The fuel tax GO bonds will mature in 2015 through 2039, and the taxable bonds will mature in 2015 through 2022.
Foster Pepper PLLC is the bond counsel. Montague DeRose and Associates and Piper Jaffray & Co., Seattle-Northwest Division, are the financial advisors.
The various purpose GO bonds are being issued to finance capital projects including K-12 and community college construction, Yakima River Basin water supply development, fish hatchery improvements, and flood and stormwater improvements.
Proceeds from the fuel tax GO bonds will be used to fund the state's transportation projects, including its SR 520 Corridor Program, high occupancy vehicle projects in Pierce County, improvements to I-90 at Snoqualmie Pass East, and replacing the SR99 Alaskan Way Viaduct with a bored tunnel.
The taxable bonds will be used to fund projects that cannot be financed with tax-exempt bonds, such as improvements to local infrastructure, community revitalization, low-income housing, and energy efficiency and renewable energy projects.
The bonds received a Aa1 rating from Moody's Investors Service and AA-plus ratings from both Standard & Poor's and Fitch Ratings. All three agencies assign a stable outlook.
"Washington's Aa1 general obligation rating incorporates the state's sound management tools such as its quarterly consensus revenue forecasting process and demonstrated willingness to address budget shortfalls, along with an economy that is improving and expected to out-perform the nation over the long term, despite a slow recovery," Moody's analysts said in the credit report.
Revenue trends for the state have been positive, supported by employment gains and improvement in the state's housing market, and available reserves have been increasing. The state has also achieved largely recurring budget balancing solutions.
Both Moody's and Fitch revised their outlooks on the state to stable from negative in August, citing such positive financial improvements.
"Moody's expects that the state will continue to address any budget gaps that emerge, as it has in the past, and absorb the substantial increase in mandated basic education funding," analysts wrote.
Fitch analysts said the rating and outlook assume the state's continued ability to maintain budget balance and an adequate reserve position in the face of funding demands presented by an education-funding court decision and transportation needs.
Standard & Poor's, which has maintained a stable outlook on Washington since 2007, said the outlook reflects the agency's view that the state's liquidity, financial trends, and strengthening economy point to an improving financial position.
The state's full faith, credit, and taxing powers secure the new GO bonds. The fuel tax GO bonds, also backed with the same GO pledge, are first payable from state excise taxes on motor vehicle and special fuels.
