Yesterday, Pierce County sold $11.3 million of general obligation refunding bonds and $189.4 million of sewer revenue refunding bonds to refinance existing debt and take advantage of lower market interest rates. The general obligation refunding will save $1.6 million in the County’s General Fund, and the sewer revenue refinancing will save the County’s sewer system more than $23.7 million.
The County’s Finance staff monitored bond market conditions over the past two years, and recent low interest rates provided the opportunity to exceed their savings targets. Interest rates averaged 0.76% on the new general obligation bonds as compared with 5.34% on the bonds being refunded. For the sewer revenue refunding, interest rates averaged 2.37% as compared with 4.19% on the debt being refinanced.
“We were pleased to take advantage of the low market interest rates,” said Gary Robinson, Director of Finance. “Along with helping the County maintain affordable sewer rates, these interest savings will make additional funds available to support our roads and sewer operations.”
The excellent credit ratings on the County’s bonds attracted strong investor interest in purchasing the bonds, contributing to the debt service savings. Moody’s Investors Service upgraded the County’s sewer revenue bond rating to Aa2 upon reviewing for the bond sale. Moody’s also added a positive outlook to the County’s Aa1 general obligation rating at the same time. S&P Global Ratings had upgraded the County’s general obligation rating to AA+ in 2019 and assigned an AA to the sewer revenue bonds. The rating reports cited the County’s growing reserves and strong management among its credit strengths.
D.A. Davidson & Co. is serving as the County’s municipal advisor and RBC Capital Markets is serving as bond underwriter for the refunding bond issues.