$423 million bond issuance takes advantage of low interest rates
The Sound Transit Board voted unanimously today to issue $423 million in bonds to finance continued construction of voter-approved mass transit projects around the region.
The 25-year bonds were issued at an overall rate of 4.6%, significantly lower than earlier assumed by the agency. Upgraded ratings from the nation's major bond rating agencies as well as a favorable bond market contributed to the success.
"Earning exceptional ratings from Moody's and Standard & Poor's is nearly on par with our construction accomplishments," said Sound Transit Board Chair and Pierce County Executive John Ladenburg. "It means our hard work to get this agency back on solid financial ground has paid off."
"The revenues from these bonds will enable Sound Transit to continue delivering transit projects across the region — projects that will help keep us moving for generations to come," said Sound Transit Finance Committee Chair and Tacoma City Council Member Kevin Phelps.
Sound Transit's long-term financial plan assumed a 5.85% interest rate for the issuance of future bonds. Over the life of the bonds issued today, the more favorable rate will translate into significant savings for the taxpayers.
Moody's upgraded the rating of Sound Transit's senior lien debt from A1 to AA3. In addition, the agency secured strong AA-category ratings for its upcoming issuance of sales tax bonds (Moody's: AA3; Standard & Poor's: AA-). The agencies cited factors including the strong financial condition of the agency, progress on capital programs, growing ridership, improvements in management, and strong governance by the Sound Transit Board.
"These very strong ratings are a testament to Sound Transit's strong financial management," Phelps said. "Our positive reception in the marketplace represents the payoff on our efforts to turn Sound Transit into a model for effective financial oversight and project delivery."
Following today's bond issuance, Sound Transit's long-term financial plan forecasts the issuance of $700 million in additional bonds to finance the remainder of the Sound Move projects that voters approved in 1996.
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Sound Transit plans, builds and operates regional transit systems and services to improve mobility for Central Puget Sound.