SAN ANTONIO (Aug. 4, 2014) – The City of San Antonio sold $233 million in bonds last week at a combined interest rate of 2.83 percent, saving City taxpayers millions of dollars on streets, parks, libraries and other capital projects. The bond sale and refinancing came one week after the City’s ‘AAA’ general obligation bond rating was re-affirmed by the three major bond rating agencies - Standard & Poor’s, Fitch and Moody’s - for the fifth time since 2010. The ‘AAA’ bond rating is the highest credit rating an organization can receive and it allows the City to pay the lowest possible interest rates in the market. San Antonio is the only major city with a population of more than one million to have a 'AAA' bond rating from any one of the major rating agencies.
The City refinanced $72.5 million in existing bonds and certificates of obligation at a 1.68 percent interest rate, saving more than $6.7 million, which provides additional capacity for more streets, drainage and other infrastructure projects. The City also issued new bonds that will fund projects in the voter-approved 2012 Bond Program, as well as street improvements and land acquisition, at interest rates of 3.08 percent and 1.26 percent, respectively. The City’s ‘AAA’ bond rating allows the City to take advantage of opportunities in the financial markets to get the lowest cost of borrowing, which means the City can spend less on interest to repay bonds and more on capital projects.
“For any citizen who has heard about the City’s ‘AAA’ bond rating and wondered why it matters, it doesn’t get any clearer than this,” said City Manager Sheryl Sculley. “By keeping our financial house in order, we are able to borrow at much lower interest rates, which translates into lower total costs for the streets, drainage, libraries, parks and other projects that the community wants.”
According to the bond rating reports, some of the factors contributing to San Antonio’s ‘AAA’ bond rating are its strong fiscal performance and the financial management policies. In May, the City Council supported staff’s recommendations to increase the General Fund Financial Reserves and ending Fund Balance, establish financial targets, and manage growing public safety expenses so that other priorities such as street maintenance, libraries, parks, code enforcement, human services and animal care are not crowded out. On August 7, the city manager will present to the City Council the FY 2015 Proposed Budget, which incorporates these recommended financial policies.
“It takes financial discipline and often difficult decision-making to maintain a ‘AAA’ bond rating,” said Mayor Ivy Taylor. “But these are the rewards we reap: low interest rates and millions of dollars in savings that can be used to invest in future projects to improve our community.”
The following transactions were conducted on Tuesday, July 29, 2014:
|General Improvement Bonds
||Projects in voter-approved 2012 Bond Program
|General Improvement Refunding Bonds
||Refinancing $72,575,00 of outstanding bonds and certificates of obligations, producing a savings of $6,703,703
||Street improvements and land acquisition