Bond Refunding Saves City of Richmond Approximately $13 Million
On Monday, December 4, 2017, the City of Richmond successfully sold its $119 million tax-exempt General Obligation Public Improvement Refunding Bonds in order to refund existing debt service and achieve interest rate savings.
The cost of funds for the city’s 2017D Refunding Bonds was approximately 2.4%, which is near the lowest cost of funds in several decades. The city took advantage of the historic low interest rate environment to refund two outstanding bond issues, which will result in the city reducing its existing debt service by roughly $13 million over the next 15 years.
Moody’s and Fitch reaffirmed their strong ratings on the city’s 2017D Bonds at Aa2 and AA+, respectively. S&P is expected to reaffirm its AA+ rating of the city’s 2017D Bonds later this week.
“These savings have the potential to accelerate funding for our priorities, such as school-related capital projects,” said Mayor Stoney. “The credit ratings additionally underscore Wall Street’s confidence in Richmond and our financial future.”
Progress made this year in the city’s Finance Department allowed Richmond to move quickly and act on the refunding opportunity. “The city’s timing for issuing these bonds could not have been better,” said Chief Administrative Officer Selena Cuffee-Glenn.
David Rose, representing the city’s financial advisor Davenport & Company LLC, credited the Stoney administration’s commitment to strong fiscal management and best practices. “We believe the city could not have taken advantage of this refunding without the completion of the FY2017 CAFR ahead of schedule and a significant general fund surplus.”