For immediate release:  May 23, 2001
For more information:  Barton Potter (360) 902-9033

State earns record savings from bond refinance

OLYMPIA—A bond refunding (refinancing) sale today allowed the Office of the State Treasurer to take advantage of current low interest rates to save more than $48 million compared to the original cost of financing the bonds.

The sale yielded more savings than any other refunding in the state’s records, State Treasurer Michael J. Murphy said.

“When we have the chance to save this kind of money for the taxpayers of the state, we will do everything we can to make it happen,” Murphy said.

The State Finance Committee this morning awarded bids to Lehman Brothers and U.S. Bancorp in separate refunding bond sales of $405.6 million and $119.6 million, respectively. The refinanced bonds were originally issued in 1991.

Refunding for the $405.6 million R-2001A bonds (various purpose general obligation bonds) saves the state nearly $37.7 million in net present value, which equates to a savings of 9.3 percent. For the $119.6 million R-2001B bonds (motor vehicle fuel tax general obligation bonds), the net present value savings total almost $10.4 million, or 8.7 percent.

Lehman offered a true interest cost (TIC) bid of 4.051 percent for the R-2001A issue. Also bidding were Merrill Lynch (4.072 TIC), Morgan Stanley (4.13) and Salomon Smith Barney (4.08).

U.S. Bancorp was the successful bidder for the R-2001B issue with a TIC bid of 4.044 percent. Also competing were Merrill Lynch (4.047), Morgan Stanley (4.085) and Salomon Smith Barney (4.048).

Treasurer Murphy is chairman of the State Finance Committee and serves on the committee along with Gov. Gary Locke and Lt. Gov. Brad Owen.

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