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.