Plus: Refunding of previously-issued bonds saves public entities more than $26 million
Salem, OR—The Oregon Treasury recently completed the sale of more than $400 million in general obligation bonds on behalf of the State of Oregon, with new funding earmarked for affordable housing, seismic upgrades of public schools, and state capital projects. The results of the sale were announced yesterday at a meeting of the State Debt Policy Advisory Commission, chaired by Treasurer Tobias Read.
“Selling bonds for critical capital projects is one of the most important ways we invest in Oregon,” said Treasurer Read. “With the economic impacts of COVID-19 affecting Oregonians across the state, these projects, and the positive ripple effects they have in our communities, are more important than ever.”
The sale included $166.6 million in tax-exempt general obligation bonds, which will fund environmental quality projects, data management systems, and grants for seismic retrofits of and other improvements to public schools.
Another $95 million of 15-year, taxable Sustainability Bonds will fund affordable housing projects throughout the state, including new home construction and housing for people experiencing chronic homelessness. This was the third issuance of sustainability bonds by Oregon Treasury with proceeds dedicated to affordable housing.
The bulk of the sale – $208.2 million – focused on refunding previously-issued general obligation bonds across the state. Refunding bonds, much like refinancing a home mortgage, reduces the cost of the bonds over time. Treasury’s Debt Management team secured a collective 1.58% interest rate for the combination of tax-exempt and taxable refunding bonds, resulting in $26.3 million in present value savings to public entities.
“The Treasury team has been carefully watching and engaging with the bond market over the past few months to secure the lowest-cost financing for Oregon,” said Treasurer Read. “While it’s been a turbulent time, they were able to complete the sale with one of the lowest costs in Oregon’s recent history.”
The bond sale received an enthusiastic reception from investors. More than 80 investors put in orders in excess of $2.3 billion for the tax-exempt portion of the sale. Another 46 investors participated in the sustainability bond sale.
In advance of this month’s bond sale, Oregon Treasury received updated ratings from Standard and Poors, Fitch Ratings, and Moody’s Investors Services. In reports published by the three firms, Oregon maintained its respective AA+/AA+/Aa1 ratings along with a stable outlook. The reports highlighted the state’s credit strength, relatively high financial reserves, and history of sustainable financial management practices.
New Projects Funded
• Department of Administrative Services Revenue Building Electrical System Upgrades $3,000,000
• Department of Administrative Services Justice Building Exterior Renovations $1,500,000
• Department of Environmental Quality Environmental Data Management System $5,000,000
• Department of Human Services ONE Integrated Eligibility and Medicaid Eligibility System $13,000,000
• Department of Corrections Camera System $3,250,000
• Department of Corrections Radio System $2,500,000
• Oregon Military Department ASLEP-Salem Owen Summers & Anderson Readiness Center $5,800,000
• Oregon Youth Authority MacLaren West Cottages Renovation $1,700,000
• Oregon Youth Authority Capital Improvements $600,000
• Legislative Administration Document Publishing and Management System $2,976,000
• Oregon Housing and Community Services LIFT Housing Program $75,000,000
• Oregon Housing and Community Services Permanent Supportive Housing Program $20,000,000
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About Oregon Treasury
The Oregon State Treasury improves the financial well-being of all Oregonians. We provide low-cost banking, debt management, and investment programs for governments and empower Oregonians to invest in themselves and their loved ones through the Oregon College Savings Plan, Oregon ABLE Savings Plan, and OregonSaves.