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District Residents Buy Over $100 Million of City Bonds in Latest Issue

Monday, May 14, 2012

District Residents Buy Over $100 Million of City Bonds in Latest Issue

The offering of Income Tax Secured Revenue Refunding Bonds carried an average interest rate of 2.5 percent, saving the city more than $35 million.

District Chief Financial Officer Natwar M. Gandhi announced today that District residents have purchased more than $100 million of the city’s latest bond sale of $314 million.

The offering of Income Tax Secured Revenue Refunding Bonds, Series 2012A and 2012B carried an average interest rate of 2.5 percent and was oversubscribed, meaning that there were more orders to purchase the bonds than there were bonds available.

The 15-year issue will save more than $35 million in interest expense, or more than 10 percent of the refunded principal amount.

The proceeds were used to refinance $335 million of outstanding General Obligation Bonds. It will continue funding for District infrastructure projects such as school modernization, recreation centers, police and fire facilities, repair of roads and bridges, and technology infrastructure.

Gandhi noted that District residents were given priority for purchasing the bonds, and more than $100 million in orders came in from resident purchasers. Since the issue received more orders than there were bonds to go around, the District was able to re-price the bonds during the sale to achieve lower interest rates on the issue. 

City officials reacted positively to the results of the bond sale.

Mayor Vincent C. Gray said, "We are grateful for this vote of confidence in the District's bright future and in my administration's commitment to fiscal responsibility."

DC Council Chairman Kwame Brown said, “The overwhelming demand for District bonds is a clear sign that residents believe in the long-term fiscal strength and financial stability of the city. The revenue raised from the sales will help us fund important city improvement projects and support community and economic development.”

Councilmember Jack Evans, chairman of the Committee on Finance and Revenue, said, “The success of this bond sale is another indication of why our city is so admired around the country for the success of its financial policies. We are in better financial shape than any other major city in the nation.”

Gandhi stated, “We are pleased that the demand for District bonds is stronger now than ever, which translates into lower borrowing costs and more money for critical programs.” 

The District’s Deputy CFO and Treasurer Lasana Mack said, “In Fiscal Year 2013, we expect to sell more than $800 million in Income Tax Bonds to provide funding for the District’s Capital Improvements Program, which includes funding for schools, transportation, parks and recreation and other important government purposes.  I encourage interested investors to check the website, www.buyDCbonds.com, for information about upcoming bond sales.”

The May 2 bond sale was advertized to local residents in Metro stations, on radio, and in print and online publications.