(Washington, DC) The District of Columbia sold $283.9 million of insured General Obligation Bonds on Dec. 6, consisting of $214.2 million of new funds and $69.7 million of refunding bonds at an effective rate of 4.4 percent, including bond insurance, liquidity facility and remarketing fees. This was achieved by selling the bonds at a variable rate and simultaneously entering into a long-term, fixed-rate swap agreement at 4 percent to guarantee essentially fixed-rate debt service through 2029.
"The District used sophisticated but prudent financing techniques that are projected to save $37 million over the life of our outstanding obligations," said Chief Financial Officer Natwar M. Gandhi. "The fact that this transaction took advantage of market conditions and financing options in a manner that produced such substantial savings to the District is a tribute to our Treasury staff and the team they put together."
DC Treasurer N. Anthony Calhoun added, "This is a historic low rate for a District government capital borrowing. We estimate this transaction will save $32 million in interest costs over a conventional bond financing. Additionally, the refunding results in gross savings of $5 million."
The bonds were rated "Aaa/VMIG1" by Moody's, "AAA/A-1+" by Standard & Poor's and "AAA/F1+" by Fitch, based on the acquired bond insurance.
The financing team was led by Bear Stearns and UBS Paine Webber, and included M.R. Beal, Morgan Stanley, Jackson Securities and Legg Mason. The firm of Hunton & Williams was bond counsel; Hawkins, Delafield & Wood was disclosure counsel; and Public Financial Management was financial advisor.