Record low interest rates and strong bond rating offer opportunity for substantial benefit
NORFOLK, VA – Norfolk sold $74,220,000 in tax-exempt General Obligation Bonds to finance capital improvements around the city on Wednesday. As interest rates declined, the City offered the bonds quickly to the market to provide long-term financing for expenditures that were previously funded on an interim basis. The sale provides strong savings for taxpayers by a utilizing a financing structure that will lower debt service costs.
Additionally, Norfolk sold $36,975,000 in taxable General Obligation (G.O.) Refunding Bonds substantially lowering the interest cost on its existing debt and ensuring the investments in infrastructure continue to be financed at the lowest interest rate possible. The refunding generated net present value savings of $2.5 million, or 8.56% of the original refinanced principal.
Disciplined and prudent fiscal management continues to provide measurable benefits to the city and are a testament to high investor confidence in its health and stability. Norfolk’s credit strength was demonstrated by the reaffirmation of its AAA rating by S&P in advance of the sale. S&P highlighted the city’s growing economy, while recognizing the local stabilizing institutional influences, including the military, shipbuilding and educational centers of the local economy. Furthermore, the rating reflects Norfolk’s strong management, very strong formalized financial policies and practices, and the city’s demonstrated commitment to maintaining operational balance, despite budgetary pressure caused by the pandemic.
The bonds were sold utilizing a strong syndicate led by Bank of America Merrill Lynch, and two co-managers J.P. Morgan and Siebert Williams Shank & Co., LLC (a woman and minority-owned firm).