The refinancing includes the first tender by a locality in Virginia.
NORFOLK, Va. – Bolstered by strong bond ratings, the City of Norfolk successfully issued $256.11 million to fund over $200 million in approved capital projects and refinanced $78.23 million in previously issued bonds for $2.15 million in debt service savings.
Utilizing two different refinancing strategies - a traditional refunding and a tender exchange - the City saved a combined $2.15 million on a net present value basis, thereby lowering future debt service costs. As part of this transaction, to refinance outstanding bonds for savings, Norfolk completed the first tender transaction by a locality in Virginia’s history.
Through this tender process, the City offered to buy back its bonds from investors before their maturity date, aiming to manage its debt more effectively under favorable market conditions.
The City’s team worked diligently to execute a successful bond sale and continues to pursue every opportunity to reduce costs, create savings and enhance efficiencies for City taxpayers. For example, the City sold these bonds with redemption provisions that are very favorable to the City, giving the City more than typical flexibility to refinance the bonds for savings in the future, if market conditions warrant. The City also optimized the structure of the bonds based on market conditions, generating an additional estimated $1 million in debt service savings over the initial estimate.
The sale was characterized by strong investor demand, including significant interest from new investors, and the feedback on the City’s bond offering was extremely positive. The number of investors demonstrated the desirability for Norfolk’s bonds in the municipal market, which is a direct result of the fiscal management and leadership. The City received orders from over forty investors, with demand for the bonds totaling more than two times what the City offered. Based on the strong demand, the City was able to lower the interest rates on the bonds, further reducing debt service costs by approximately $290 thousand over the life of the bonds. The true interest cost on the bonds was just below 3.8 percent.
BofA Securities led the transaction with J.P. Morgan, Raymond James, and Truist Securities as the co-managers. The bonds are scheduled to close on October 15, 2025.