For immediate release:  March 24, 2000
For more information:  Barton Potter (360) 902-9033

School Bond Guarantee Program Earns Aa1 Bond Rating

The new School Bond Guarantee Program, set for launch in May by the Office of the State Treasurer, pledges the full faith, credit and taxing power of the state to guarantee repayment of voter-approved general obligation bonds by school districts whose voters approve construction levies.

Moody’s will assign a Aa1 rating to all school district bonds guaranteed under the state program. Moody’s said in a news release from its New York headquarters that its high rating acknowledges Washington state’s pledge to guarantee school district debt and reflects the strength of the program’s mechanics and guidelines.

Moody’s also said the state’s favorable credit profile (an all-time best overall bond rating of Aa1) played a big role in the School Bond Guarantee Program earning the same high rating.

“We’re ecstatic about this recognition of the strength of this new program and the general high regard for the State of Washington in the bond marketplace,” State Treasurer Michael J. Murphy said. “This is a win for the state, for school districts and for every taxpaying citizen of Washington.”

Last November, Washington voters approved the School Bond Guarantee Program by passing Senate Joint Resolution 8206, which authorized a constitutional amendment to allow the Treasurer to offer the guarantee of the state. When local voters approve a school construction levy, the school district can obtain the lowest possible interest rate when it takes the bonds into the marketplace, backed by the state’s guarantee.

While the guarantee does not reduce a school district’s responsibility for repaying its debt, it can save the cost of buying bond insurance. About 80 percent of school districts in the state purchase bond insurance to lower their interest rates.

Program guidelines adopted March 16 outline how school districts can obtain a Certificate of Eligibility to use the bond guarantee program, how to use the certificate to issue bonds, and the mechanisms to guarantee settlement if a school district defaults on its bond repayment.

###