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Published on Wednesday, August 14, 2019

City of San Antonio’s excellent credit ratings secure savings in the financial market and fund voter-approved bond program projects

CONTACT: Laura E. Mayes, 210-207-1337
laura.mayes@sanantonio.gov
Spanish media: Carlos Valenzuela, 210-207-3919
Carlos.valenzuela@sanantonio.gov

 

SAN ANTONIO (Aug. 14, 2019) – With the City of San Antonio’s ‘AAA’ and ‘AA+’ credit ratings reaffirmed by the three major rating agencies, the City proceeded with the issuance of bonds in a historically low and favorable interest rate market.

 

“The City was able to sell these bonds at a great interest rate because of great fiscal management, and as a result we saved millions of dollars that would have gone to debt service,” said Mayor Ron Nirenberg. “This sale proves the value of financial discipline.”

 

On Tuesday, the City of San Antonio sold $454.9 million in general obligation bonds, certificates of obligation and tax notes, which allows the City to fund voter-approved projects from the 2017-2022 Bond Program.

 

“The financial markets view San Antonio as one of the best-managed big cities in the nation. Our strong financial management, policies and practices result in lower borrowing costs. This directly enhances our financial capacity to deliver much needed infrastructure improvements in our community,” said City Manager Erik Walsh.

 

The sale also included the refinancing of $187.4 million in existing debt issued in 2010 for interest cost savings over the life of the bonds of $26.1 million in today’s dollars. The City also sold certificates of obligation totaling $36.4 million and tax notes totaling $34.6 million to fund projects included in the capital budget. The sale took place after the City achieved ‘AAA’ ratings from Standard & Poor’s and Moody’s Investors Service for the tenth consecutive year. Fitch Ratings also affirmed their ‘AA+’ rating. The overall total interest cost for the financing was 2.27%.

 

Tuesday’s sale included:

  • $215.1 million in general improvement bonds for the third issuance of projects in the voter-approved 2017 Bond Program, including more than $131 million for streets, bridges and sidewalks, $31 million for drainage and flood control projects, and $59 million in parks, recreation facilities and natural areas;
  • $168.8 million in refunding bonds to refinance $187.4 million in existing debt issued in 2010 for present value interest cost savings of $26.1 million or 13.9% of the refunded bonds;
  • $36.4 million in certificates of obligation to fund the Public Safety Radio System, Enterprise Land Management System and street improvements; and
  • $34.6 million in tax notes to fund street and information technology improvements.

 

The City obtained favorable results in the financial market, which are summarized below:

TYPE  AMOUT* TOTAL INTEREST COST  PURPOSE 
General Improvement Bonds $215.1 Million 2.28% Projects in voter approved 2017 Bond Program
General Improvement Refunding Bonds $168.8 Million 2.32% 2010 Build America Bonds
Certificates of Obligation $36.4 Million 2.16% Public Safety Radio System, Enterprise Land Management System and Street Improvements
Tax Notes $34.6 Million 1.11% Street and Information Technology Improvements
TOTAL $454.9 Million 2.27%

*Represents the par amount sold. These differ from the funding amounts as the funding amounts include the par and premium generated in the transactions.

 

The transactions were sold by an underwriting syndicate led by Citigroup, as Senior Book Running Manager; Hutchinson, Shockey, Erley & Co. as Co-Senior Manager; and Loop Capital Markets, Morgan Stanley, RBC Capital Markets, SAMCO Capital Markets, Inc., Ramirez & Co., Inc., and Siebert Cisneros Shank & Co., LLC as Co-Managers. 

 

FTN Financial Municipal Advisors and Hilltop Securities Inc., served as Co-Financial Advisors.  Norton Rose Fulbright US LLP and Kassahn & Ortiz, P.C. served as Co-Bond Counsel. 

 

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Author: Melanie Morales (GPA)

Categories: City News

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