On Monday, June 7th, the City of San Antonio presented to the three national bond rating agencies, Standard & Poor’s; Moody’s Investors Service, Inc. (“Moody’s”) and Fitch Ratings (“Fitch”), to receive updated bond ratings for the City’s bond sales which were priced the week of June 14th. I am pleased to report that the San Antonio’s ‘AAA’ general obligation bond rating was reaffirmed by all three rating agencies. The ‘AAA’ bond rating is the highest rating that a City can receive.
Of the top ten largest cities in the United States, San Antonio is one of only two cities that have a “AAA” rating and the only city to have a ‘AAA’ rating from all three major rating agencies. Standard & Poor’s upgraded San Antonio in October 2008 and Fitch and Moody’s assigned a ‘AAA’ as a result of a re-calibration process in which their credit ratings of U.S. municipal securities were adjusted to conform to their respective global ratings scales.
In reaffirming the ‘AAA’ bond rating, the rating agencies cited San Antonio’s diverse economy, strong financial management policies, strong and healthy financial position, sound financial reserves, long-term debt planning, and overall debt management.
This high credit rating allows the City to lower our cost of borrowing for capital projects, enhances our ability to access the financial markets in difficult market conditions, and helps us build future financial capacity for the many needed capital improvements for our community.
Additionally, on June 15th, the City issued, in total, $248.3 million in bonds and included:
$191.5 million in Build America Bonds (Taxable Bonds)
$8.8 million in Tax-Exempt General Obligation Bonds
$38.4 million in Tax-Exempt Certificates of Obligation
$9.6 million in Tax-Exempt Tax Notes
This bond sale represents the first time the City has issued Build America Bonds or “BABs”. BABs were created by the United States Congress in 2009 to provide economic stimulus by expanding the investor base for municipal debt, resulting in a lower cost of borrowing. BABs enable cities to issue debt and receive a federal tax subsidy (equal to 35% of their interest expense for BABs issued prior to January 1, 2011) as an alternative to traditional tax-exempt debt. This bond sale also represented our third installment of bonds for the 2007 Bond Program as well as funding for other projects in our Capital Budget.
Our City’s financial management is strong and committed to keeping us economically competitive, while growing a healthy General Fund financial reserve over the past five years.