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City sells $14.535 million in general obligation bonds at favorable rates; Moody's reaffirms rating
Summary
Iowa City sold $14.535 million of general obligation bonds May 6, accepting the low bid from Jefferies LLC at a true interest cost of about 3.39%. Moody's reaffirmed the city's strong rating. Proceeds net of issuance costs will fund capital projects listed in the CIP.
The City Council authorized the sale of $14,535,000 in general obligation bonds May 6 and received a post-sale report on the sale results and the city's credit rating.
Municipal advisor Spear Financial reported the winning bid from Jefferies LLC at a true interest cost of approximately 3.3936%. Moody’s reaffirmed the city’s A (stable) credit rating (reporting strong governance, a healthy fund balance and a robust local economy anchored by the University of Iowa and University of Iowa Hospitals & Clinics). Bonds are callable beginning June 1, 2032.
City staff explained that cost of issuance (attorney fees, rating agency fees, municipal-advisor fees and other closing costs) will reduce gross proceeds; staff estimated those issuance costs at roughly $84,000 and said net proceeds will be available to fund the capital projects included in the city’s 2025 capital plan. Over the life of the bonds, principal and interest payments total roughly $18.0 million if held to maturity; premium generated at sale reduced the city’s effective interest rate.
Council thanked staff and advisors for managing the process and approved the resolution directing the sale; the motion carried 7–0.
