Newark has refinanced its debt with the issuance of $100 million in General Obligation Refunding Bonds, Mayor Ras Baraka announced recently, helping the city save nearly $15 million — money that will help alleviate some of the COVID-19 pandemic’s impact on city finances.
The refinancing structure will generate realize about $14 million in gross debt service savings in 2020 and 2021, the city said in a news release, part of the nearly $15 million overall savings.
In addition, Moody’s Investors Service affirmed its “Baa2” rating and “Positive” outlook for the city, the news release noted.
“The COVID-19 pandemic and the economic crisis that followed it have had immense impact on Newark’s revenues and expenditures, as it has on every municipality in America,” Baraka said in a prepared statement. “At a time when cities are facing the tough decision of having to lay off employees and reduce services, we have been able to avoid that and have kept up our Moody’s rating.
“We are not out of the woods yet, but our finance team has worked tirelessly to enable our employees to continue to deliver critical services with no layoffs or furloughs, through new revenue sources, saving $14 million in this bond refinancing and saving millions more through fiscal belt-tightening.”
The successful pricing transaction drew strong demand, with an overall subscription nearly 11 times the amount offered, the city said in a news release. Retail and institutional orders came from 34 different investors and totaled $1.134 billion. As a result, the city was able to lower bond yields and generate millions of dollars in savings.
The bonds were priced Aug. 13 and are scheduled to close Aug. 27. Siebert Williams Shank & Co. LLC, a top-ranked minority- and women-owned business enterprise, served as book-running senior manager, and the transaction was staffed by a diverse financing team, the city said.
“We have achieved this during the worst pandemic the country has endured in more than 100 years,” Baraka noted. “Additionally, in our ongoing commitment to diversity, the bond deal was led by women and minority financial professionals.”