2021-082 Utility System Revenue Bond Sale ResultsDate: October 1, 2021 Report No. 2021-082
INFORMAL STAFF REPORT
TO MAYOR AND CITY COUNCIL
SUBJECT:
Bond sale results for the City’s Utility System Revenue Refunding Bonds, Taxable Series 2021.
BACKGROUND:
The purpose of this report is to provide the City Council with details regarding the results of the
sale of the Utility System Revenue Refunding Bonds, Taxable Series 2021 (hereafter, the
“Bonds”) authorized on February 23, 2021 (Ordinance No. 2021-356). The Bonds were issued
in the amount of $141,990,000 to pay off the outstanding extendable commercial paper notes
incurred as a result of Winter Storm Uri and convert the short-term debt into a long term
financing. The Bonds are secured and payable only from revenues of the City’s Utility System,
which is comprised of the Electric, Water and Wastewater Funds.
DISCUSSION:
On August 26, 2021 the City with guidance from their financial advisor, Hilltop Securities,
conducted a negotiated sale of the Bonds with Citigroup Global Markets Inc., JP Morgan
Securities LLC, Raymond James and Loop Capital Markets as the underwriters.
This Utility System revenue bond sale included bond insurance to reduce the interest cost to the
City. The insurance created an “enhanced” (higher) credit rating, which lowered our interest rate.
The cost of the bond insurance was more than offset by the lower yields to investors which
resulted in a lower debt service to the City. The insured rating on the Bonds is “AA” from
Standard & Poor’s and the unenhanced credit ratings are “A+” by Standard and Poor’s and “A”
by Fitch.
The Bonds met the following required parameters as outlined in the Bond Ordinance approved
on February 23, 2021 which delegated the final terms of the sale:
1. Maximum principal amount of bonds must not exceed $300,000,000;
2. Final stated maturity shall not exceed 30 years from the date of issuance;
3. The Bonds shall bear interest at a fixed rate, and the net effective interest rate on the
Bonds shall not exceed the maximum net effective interest rate permitted by law (15%).
4. Delegation authority ends January 12, 2022;
5. The Bonds shall be rated in one of the four highest categories for long-term obligations.
The Bonds sold with a 30-year maturity and at an all-in borrowing cost of 2.95%.
Please do not hesitate to contact me if you have any further questions on the results of the City’s
most recent bond sale.
Date: October 1, 2021 Report No. 2021-082
STAFF CONTACT:
Randee Klingele, Treasury Manager
940-349-8206
Randee.Klingele@cityofdenton.com