What role do credit rating agencies play in the debt refunding process for Sound Transit?

Credit rating agencies are asked to rate the new debt issuance as well as the current outstanding debt to provide transparency and assurance to investors.

How much is Sound Transit expected to save by refunding its debt?

Sound Transit is expected to save approximately $23 million by refunding its debt.

What is the significance of a credit rating for Sound Transit's new debt issuance?

A credit rating provides investors with an assessment of the creditworthiness and financial health of Sound Transit's new debt issuance, influencing their investment decisions.

What does the process of debt refunding involve for an organization like Sound Transit?

Debt refunding involves issuing new debt at potentially lower interest rates to replace or pay off existing debt, aimed at reducing overall borrowing costs and improving financial stability.

Seattle's Sound Transit Refunds Debt, Saving Approximately $23 Million

As part of the debt refunding process, Sound Transit requested that the credit rating agencies rate the new debt issuance along with the current outstanding debt.

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June 26, 2026

Seattle's Sound Transit Refunds Debt, Saving Approximately $23 Million — Sound Transit issues both fixed- and variable-rate bonds to minimize net interest payments over time. Agency staff thoroughly evaluates all options before any financing transaction to ensure it meets Sound Transit’s goals.
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Sound Transit has saved approximately $23 million by refunding its debt.
The agency requested credit rating evaluations for both the new and existing debt issues.
The refunding process involved assessing the debt’s financial stability and creditworthiness.

*Summarized by AI

The board at Seattle’s Sound Transit approved refunding $205 million in 2016 bonds backed by sales taxes and motor vehicle excise taxes for a more favorable interest rate on the debt.

The move decreases debt service costs by about $23 million in today’s dollars, said officials.

Ensuring Maximum Value

As part of the debt refunding process, Sound Transit requested that the credit rating agencies rate the new debt issuance along with the current outstanding debt. Those agencies graded Sound Transit at levels that will ensure the lowest possible borrowing costs for future debt issuance.

Officials said that specifically, those agencies found:

S&P affirmed its current ratings for outstanding debt (AAA/AA+) and assigned an AAA rating for the new issuance.
Fitch assigned a AAA rating for the new issuance and upgraded all their other ratings on current debt to AAA.
Moody’s rated the new issuance Aa1 and affirmed the rating on the prior lien at Aaa.

“As a public agency, we are constantly looking for ways to optimize our debt to save money and maximize value for the communities we serve,” said Sound Transit CEO Dow Constantine. “It is exactly this type of proactive management of our borrowing strategy that will position us to deliver every project in the ST3 program successfully.”

Sound Transit issues both fixed- and variable-rate bonds to minimize net interest payments over time. Agency staff thoroughly evaluates all options before any financing transaction to ensure it meets Sound Transit’s goals.