The City of Suffolk competitively sold over $76 million of bonds on Thursday, July 14, 2016, in the public marketplace. The City’s “AAA” credit rating from Standard & Poor’s and Fitch played a vital role in the favorable results of the bond sale.
The basis for the City’s credit ratings upgrades have been attributed in part to our strong management and financial policies, our consistent ability to maintain balanced budgets, and our robust economy.
The bond sales results were very positive and the quantifiable savings can be measured in literally millions of dollars. With the “AAA” rating representing the credit worthiness of the City of Suffolk’s government issued bond and the assurance that both the principal and interest on the bonds will be paid on time and in full, eight firms eagerly submitted a bid within seconds of the 2016A series bonds hitting the market, and nine bids for the 2016B series. Recognizing that the City of Suffolk has the highest quality of bonds with the least amount of risk, the winning bidder for the 2016A bonds was Bank of America/Merrill Lynch, and Fifth Third Securities, Inc. for the 2016B bonds.
The bonds were issued to finance various public improvement projects, primarily the construction of a new middle and new elementary school, all of which will be of tremendous benefit to our citizens, and to refund certain general obligation debt that was previously issued by the City. The issuance included $29.6 million of new money and $47 million in refinancing. The 2016A&B Bonds were priced aggressively and can be attributed in part to the City’s high credit ratings and the currently low interest rate environment.
For the bonds issued to fund the public improvement projects the All-in interest rate is 2.3%. This rate is the lowest rate the City has achieved in at least the last 10 years. This money will play a key part in the advancement of both a new middle school and a new elementary school in the northern part of the City, as well as other governmental project and equipment needs.
On learning of the successful sale Mayor Linda T. Johnson stated, “Our sound and fiscally responsible financial policies have continued to benefit our citizens and will allow us to maintain the high levels of services they deserve and expect of their government.”
The interest rate on the refinanced loans was lowered from 4.55% to 2.2% which generates approximately $4.3 million in savings over the life of the loans.