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With the federal government still eyeing another possible shutdown, it wouldn’t have seemed like a good time for the nation’s capital city to borrow nearly $1 billion in the bond market.
But if there was any concern among investors when the securities were offered early Wednesday, it didn’t register in the prices, despite how dependent its economy is on government spending.
When the District of Columbia sold almost $950 million in bonds, the difference between the yields it paid and top rated debt -- a key measure of risk -- were virtually unchanged from when it sold securities in July. Underwriter Bank of America Corp. set the yields on 10-year bonds at 2.35 percent, or 0.13 percentage point over AAA rated securities, according to data compiled by Bloomberg. In this summer’s sale, that gap was 0.14 percentage point.
The warm bond-market reception illustrates how much Washington’s finances have steadied since the 1990s, when Congress put a control board in place to balance its budgets. Its fortunes have since turned around significantly, thanks to increases in government spending, rising real estate values and an influx of residents. S&P Global Ratings, which gives its bonds the second-highest grade, says the city’s "economic and financial strength is at an all-time high."
Although the prospect of another partial government closure appears to have dwindled, with President Donald Trump saying Wednesday he doesn’t "want to see a shutdown," the bonds were marketed ahead of his comments.