CHARLESTON, WV – Gov. Jim Justice announced today that the State of West Virginia has sold $200 million in General Obligation State Road Bonds, Series 2021 A (“2021A GO Bonds”), and generated over $262.5 million in proceeds – a premium of over $62.5 million – to be used for new highway, bridge, and secondary road construction projects throughout the state.
The premium rate achieved in this sale marks the highest premium rate of any of the State’s road bond packages to date. The State’s strong credit rating and positive market conditions also allowed the State to lock in an attractive blended borrowing rate of 2.557% on the $200 million of general obligation bonds offered as part of this transaction.
“Advisors initially recommended to Governor Justice that, due to the uncertainties in the market brought on by the pandemic, we should sell the bonds privately,” Revenue Secretary Dave Hardy said. “But – and this is what makes Governor Justice who he is – Governor Justice believes in West Virginia more than anyone. He recognized that, with all of the successes that we’ve seen recently and all of the momentum that we’ve built, it put us in an incredibly advantageous position when it came time to go to market with our road bonds. So the Governor decided that he still wanted to hold the sale publicly, and that might go down as one of the all-time greatest fiscal decisions in State history, because the premium and interest rate we were able to attain are outstanding.”
The 2021A GO Bonds were approved and made possible by the voters of the State of West Virginia on Oct. 7, 2017, and represent the third and final issuance of general obligation bonds under the Governor’s Roads To Prosperity program.
The bonds were sold competitively on Tuesday with some of the world’s largest banks submitting bids. Bank of America was the winning bidder.
Based on recent meetings on Wall Street with each of the “Big Three” credit rating agencies – Moody's, S&P, and Fitch – the agencies rated the bonds “Aa2,” “AA-,“ and “AA,” respectively. In S&P’s credit report, they shared their view that “the state has weathered the economic effects of the pandemic well” while maintaining “strong budgetary management.”
While the State was in the market with the 2021A GO Bonds, it also took advantage of a refinancing opportunity to lock in net present value savings of $676,220.26 on a Series 2021 B refunding of certain outstanding Safe Road General Obligation Bonds.
So far, over $1.1 billion worth of major infrastructure improvement projects through Gov. Justice’s Roads To Prosperity program have either already been completed or are currently underway with the funding from the previous two rounds of bond sales.
In May 2018, the State locked in a low borrowing rate of 3.575% on the State’s first issuance of general obligation bonds as part of the Roads To Prosperity program, offered in the amount of $800 million.
Then, in December 2019, the State locked in a rate of 2.999% on the second issuance of $600 million in general obligation Roads To Prosperity bonds.
“Can you believe that?” Secretary Hardy said. “Even with interest rates gradually rising, under Governor Justice’s leadership, we secured the lowest rate of the entire program on our last tranche of road bonds.”
Gov. Justice signed two executive orders to authorize and approve the sale of the bonds: