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Council adopts $28.38 million general-obligation bond sale; true interest cost about 4.62%
Summary
The council approved an ordinance authorizing the sale and issuance of general obligation corporate bonds, Series 2025, following a substituted ordinance that finalized sale amounts and rates. Financial advisors said the city retained double-A ratings and received competitive bidding.
Davenport City Council on April 9 adopted an ordinance authorizing the sale and issuance of $28,383,000 in general obligation corporate bonds, Series 2025, and approved a substituted ordinance reflecting the final par amount and interest rates after bids were received earlier that day.
Financial advisor John Burmeister of PFM told the council the city's S&P and Moody's ratings were reconfirmed (S&P double-A; Moody's double-A2 with a positive outlook), and that the sale drew multiple underwriter bids. Burmeister reported a true interest cost near 4.62 percent after the bid and a slight adjustment to the par amount following the sale.
Why it matters: The bond proceeds will fund the city's capital improvements program; the interest rate affects long-term debt service and the city's ability to finance projects without rebalancing the five-year CIP.
"You can see that the S and P, they did reconfirm your double a rating," John Burmeister said, adding that Moody's assigned a positive outlook. He also described competitive bids from multiple firms, which produced closely matched true interest costs in the prosecution of the sale.
Council approved substitution of the ordinance and then suspended the rules to consider second and third readings at the same meeting. Roll calls on substitution, suspension and final passage were unanimous (10 yes, 0 no). Burmeister told council the par amount was modestly adjusted after receiving bids, and staff presented a revised ordinance with the final terms.
Council members asked how the roughly 4.62 percent rate compared with past sales; Burmeister and finance staff noted rates are higher than several years ago and that the city's CIP budgeting assumes conservative interest-rate estimates to avoid disruption if market rates rise.
Ending: The substituted ordinance with final rates and par amount was adopted and staff said the bond proceeds will be used per the CIP; the finance team will distribute the final sale documents and updated debt-service schedules to council.
