Oregon State Treasury completes $721 million in bond sales to fund wide variety of projects

SALEM, Ore. (KTVZ) -- Affordable housing, drinking water improvements, schools and earthquake readiness are just a few of the projects that will be funded, thanks to Oregon State Treasury’s recent $418 million general obligation bond sale on behalf of the state.

The recovery of Lottery sales permitted a long-awaited sale of $218 million bonds for the state’s Lottery program, which will fund a variety of projects including park improvements, building renovations and veteran housing programs.

Lastly, an $85 million bond sale for the Oregon Housing Single-Family Mortgage Program will provide support for existing and newly originated mortgage loans.

“Bonds are an effective tool that we use to support critical capital projects and invest in Oregon,” said Treasurer Tobias Read. “Bond-funded projects encourage economic development, enhance sustainability, address critical needs including better access to education, housing and services for wellness and preserve our environment. Our strong stewardship of financial resources permits us to invest in building stronger and healthier communities for Oregonians over the long run, and that is good for everyone.”

Treasury’s Debt Management team wrapped up the spring general obligation bond sale in the middle of May after securing low-cost financing in a volatile market environment. The sale includes approximately $200 million in tax-exempt general obligation bond proceeds for approximately twenty-one projects from 10 different state government entities.

Projects include capital improvements at the Oregon School for the Deaf, improvements to Salem’s drinking water system, renovations and accessibility improvements to judicial buildings and the state Capitol, and upgrades to various information systems.  Additionally, $66 million will fund grant program bonds for implementing seismic upgrades for school districts and emergency services buildings.

Another $175 million of taxable Sustainability Bonds will fund affordable and permanent supportive housing throughout the state, including new home construction and housing for people experiencing chronic homelessness. This was the sixth issuance of sustainability bonds by Oregon Treasury with proceeds dedicated to affordable housing.

The Lottery Bond transaction was priced on April 12 and was officially closed on May 10. The sale included approximately $94 million in tax-exempt bonds and $124 million in taxable bonds. The projects funded included upgrades to the Eugene Family YMCA facility, Sherwood Pedestrian/Bike Bridge, Gradin Community Sports Park and various building renovations.

“The market continues to evolve as the pandemic wanes. With the rise in interest rates as the Federal Reserve seeks to curb inflation, Treasury staff must remain diligent to ensure that the state maintains its high credit profile and broaden its investor outreach to achieve favorable financing results,” said Jacqueline Knights, Director of Debt Management at Oregon State Treasury. “Despite record withdrawal of funds from the municipal market, the State’s bonds saw significant investor demand, which translates to better pricing – even under volatile market conditions.”

In advance of the spring bond sales, Oregon Treasury received updated General Obligation bond ratings from Standard and Poor’s, 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 – a welcome confirmation of the state’s fiscal management.

Additionally, the State’s Lottery Program received a confirmation of stability from Moody’s Investors Services and Standard and Poor’s, with ratings of Aa2/AAA respectively.  Lastly, Oregon Housing and Community Services Department received a rating of Aa2 for the Single-Family Mortgage Revenue Bonds. Moody’s also maintains the Aa2 ratings on all outstanding long-term parity debt issued under the Mortgage Revenue Bond Indenture with a stable rating outlook.

The Single-Family Mortgage Bonds transaction was priced on April 5 and was officially closed on April 27. The sale included approximately $78 million in tax-exempt bonds and $7 million taxable bonds. The proceeds will be used to refund outstanding Oregon Housing and Community Services Department Mortgage Revenue bonds leading to a decrease in department costs. They will also be used to purchase mortgage loans that provide financing for existing, or newly constructed single-family residences.

Treasury has been active in issuing debt for developers who create affordable housing statewide as well as non-profits such as health care institutions. For the calendar year to date, Treasury has worked with its Oregon Housing partners and developers to close 15 deals totaling $256 million for affordable housing projects across the state.