City Completes Bond Sale and Obtains Lower Rates
On November 17, 2015, the City of Richmond successfully issued $85.8 million of taxable and tax-exempt series of bonds, which were sold by competitive bid. Seven bids were received for the $62.8 million Series 2015B bonds, with Bank of America Merrill Lynch winning the bid. Seven bids were also received for the $23.0 million Series 2015C bonds, with Robert W. Baird & Co., Inc., winning the bid.
Reporting before the Finance and Economic Development Standing Committee today, the City noted that investor demand for the City’s bonds was considerable and that the bonds sold with a lower than expected interest rate, saving money for the city. The City received an interest rate of 3.83% on its taxable bond issuance, over 1.25% lower than initial planning rates. The longer term tax-exempt series received a 3.16% interest rate.
The bonds sold will be used to finance spending related to general capital improvements for Stone Brewery as well general capital improvements in the City’s Capital Improvement Plan.
“These lower-than-expected rates are a benefit of the City’s strong credit rating, and sound management that has protected that rating,” stated Mayor Dwight C. Jones.
All three of the national credit agencies, Moody’s Investor Service, Fitch Ratings, and Standard & Poor’s, rate Richmond’s bonds Aa2, AA+ and AA+, respectively, with a Stable outlook, which is considered “very strong”. The City’s ratings are either one or two notches away from “AAA”, the highest possible credit rating. This fact, coupled with near historic low interest rates, provided the City the opportunity to achieve these excellent results.