NORFOLK, VA – The City of Norfolk today successfully sold $51,515,000 of Water Revenue Bonds on a competitive basis using Grant Street Group’s MuniAuction platform.
Along with below-market-rate, federally subsidized loans and pay-as-you-go capital dollars, the Bonds are a key component of low-cost funding for cost-effective improvements in water infrastructure in accordance with the Water Utility Fund’s capital improvement plan.
Notable projects funded by the bond sale include upgrades to the water treatment plants, improvements to water pipeline infrastructure, improvement to the resource and delivery systems, and installation of water storage tanks.
The Bonds were purchased by Morgan Stanley, who submitted the winning bid with a true interest cost of 4.28 percent. The pricing outcome reflects the strong financial management by the City and the attractiveness of the credit.
During the auction, 14 competing banks – or “underwriters” – submitted a total of 86 bids. Using the open auction process, each time an underwriter submitted a bid, it and all other underwriters who had previously bid instantaneously learned their rank. Underwriters then had the option to either hold or improve their bid (i.e., lower their True Interest Cost, or “TIC”) to win the Bonds. Due to the strong demand for the Bonds, the bid period was extended eight times, causing the sale to remain open for an additional eight minutes.
The City was the first in Virginia to utilize this open auction process in 2019, which has grown in popularity. Today this enhanced competitive process resulted in the City achieving a lower borrowing cost. Between the initial bid submitted and the final bid submitted by Morgan Stanley, the City’s total debt service cost decreased by $561,000.
The City continues to demonstrate strong fiscal management and smart stewardship of tax and rate payer dollars. The City’s team worked thoughtfully to execute a successful bond sale, allowing for the investment in the infrastructure of the water system. The number of bidders demonstrated how desirable Norfolk’s Bonds are in the municipal market, which is a direct result of the fiscal management and leadership of the City as shown in strong bond ratings.
In advance of the sale, both S&P Global Ratings and Fitch Ratings affirmed their AA+ ratings on the Water Revenue Bonds. These strong ratings continue to assist the System in achieving the lowest cost of funds.