Bond Transactions – Refinancing Savings

On Tuesday, June 4th we  Refinanced the Starbright Industrial Development Corporation Contract Revenue Bonds and Achieved interest cost savings.  The Bonds were originally sold in 2003 to provide funds for land and site preparation costs and a training facility for the Toyota plant site.  Debt service payments for the Bonds are paid from the General Fund.

The Bonds are rated “AA+”,“Aa1”, and “AA+” by Fitch Ratings, Moody’s Investors Services, Inc., and Standard and Poor’s Ratings, respectively.  These ratings were affirmed on May 28th for this bond refinancing.

On Tuesday, June 4th, the Bonds in the amount of $20,890,000 were priced by a syndicate led by Loop Capital Markets, LLC, who served as Senior Book Running Manager; and SAMCO Capital Markets, Inc., who served as Co-Manager.

The refunding transaction produced total savings of $2,002,193 with upfront savings of $926,923 in FY 2014, $925,858 in FY 2015, and $103,115 in FY 2016.  Net present value savings on the transaction was $1,872,715 or 8.78% of the refunded obligations.  The true interest cost on the transaction, which represents the total cost of obtaining debt financing on this bond transaction is 3.85%.

This refinancing transaction which produced significant interest cost savings is another example of the City’s proactive debt management. We actively monitor all of our outstanding debt looking for opportunities to lower our cost of borrowing.  Since April 2012, the City has completed 5 refunding transactions for interest cost savings resulting in Total Gross Savings of $39.9 million and Net Present Value savings of $32.6 million.

This is great news for San Antonio residents as these refinancings lower the interest costs that the City pays on the money we have borrowed.

This transaction included the services of: Coastal Securities, Inc. and Estrada Hinojosa & Company, Inc., as the Co-Financial Advisors, and McCall, Parkhurst & Horton L.L.P. and Escamilla, Poneck & Cruz, LLP, as the Co-Bond Counsel.

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