Washington Sells First Deal After Boeing Threat: Muni DealsRomy Varghese
Washington is tapping investors to borrow $717 million, less than a month after averting the loss of Boeing Co. jobs and a potential credit-rating cut.
The general-obligation bond offer is set for tomorrow. The money will go toward projects such as school buildings and a tunnel to replace a highway in Seattle called the Alaskan Way Viaduct, which was damaged in a 2001 earthquake, deal documents show.
Boeing, Washington’s largest private employer, considered moving production of its new 777X jetliner out of the state where the company has been for nearly a century unless it received labor concessions. The manufacturer’s largest union on Jan. 3 agreed to freeze pensions starting in 2016. Loss of the work would have been a “credit negative” for the state and the region, according to Moody’s Investors Service.
“This decision simply removes any doubts about our long-term economic growth trajectory,” state Treasurer James McIntire said by e-mail.
While most of the debt is tax-exempt, an $88.1 million portion is taxable and will fund loans to local governments for low-income housing and energy-efficiency programs, according to McIntire.
Moody’s grades Washington Aa1, the second-highest level, saying the state’s economy should outpace the nation.
Investors demand about 0.2 percentage point to 0.22 percentage point of extra yield to own the state’s 10-year general obligations, according to Ellen Evans, Washington’s deputy treasurer.
After the offering, the state will have $19 billion in general-obligation securities, said Standard & Poor’s, which also grades the debt second highest, at AA+.
Washington plans to sell an additional $820 million in general-obligation bonds this year, deal documents show.
Securities from Washington issuers fell 1.8 percent in 2013, outperforming the entire market’s 2.6 percent drop, according to S&P data.