Short-term market's appetite will be fed with Sound Transit remarketing
A transit agency in Washington state is remarketing $150 million of bonds to take advantage of variable interest rates to fund rail and bus service.
The two $75 million bond offerings were originally issued in 2015 as index floating rate bonds and will be remarketed July 19 at the Securities Industry and Financial Markets Association Index, according to the offering statement by the Central Puget Sound Regional Transit Authority.
The authority is the main transit provider in three counties with 3.1 million people – representing 42% of the state’s population -- including the cities of Seattle, Tacoma, Bellevue and Everett.
The bonds are secured by sales, vehicle and rental car taxes approved by voters and increased since 1996 to pay for transit improvements in the region.
Most recently, voters approved tax increases in 2016 as part of a $57.3 billion plan to expand the light rail system to 116 miles and increase express bus service over 25 years.
The bond proceeds help pay for the implementation of that plan, said Jessica Jaeger, acting treasurer for the transit authority.
In May, the agency decided to remarket the bonds at both three-year and five-year periods to meet liquidity and funding needs, she said.
“There’s definitely an appetite for both the shorter three-year duration and the five-year duration,” Jaeger said.
The 2015 series was the agency’s first use of variable rate bonds which officials says resulted in about $10 million in interest savings.
RBC Capital Markets is the underwriter for the negotiated sale. The bond counsel is Orrick, Herrington & Sutcliffe LLP and Piper Jaffray & Co. is the municipal advisor.