July 13, 2011

City of San Antonio’s High Bond Rating Affirmed

Bond Issuances Yield Excellent Results

SAN ANTONIO, July 13, 2011 /PRNewswire-USNewswire/ -- The City of San Antonio's 'AAA' general obligation bond rating has been affirmed by the three major bond rating agencies, Standard & Poor's, Fitch, and Moody's. The 'AAA' bond rating is the highest credit rating that an entity can receive. San Antonio is the only city with a population of more than 1 million to receive a 'AAA' general obligation rating from all three major rating agencies.

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"I am very pleased that the City's 'AAA' bond rating has been affirmed. The 'AAA' General Obligation rating is a reflection of the City's solid financial position and our commitment to improve the City's financial management policies and practices," said City Manager Sheryl Sculley. "This excellent bond rating allows the City to achieve a low cost of borrowing resulting in less interest costs to City taxpayers and providing more funding for needed capital improvements in our community."

Some of the rationale for the 'AAA' bond rating cited in the bond rating reports included a diverse regional economy; strong financial management policies and practices of the City; a two-year budget plan; solid financial reserves; and comprehensive long-range financial planning.

The City also received a 'AA+,' 'AA+,' and 'Aa1' from Standard & Poor's, Fitch, and Moody's, respectively, on the Municipal Finance Corporation Lease Revenue Bonds which are being issued to finance construction of the City's new Fire and Police Emergency Dispatch Center. These are outstanding ratings and are one notch below the City's 'AAA' general obligation bond rating. Generally, lease revenue bonds such as these are rated one notch below the general obligation bond rating.

On Tuesday, July 12, 2011, the City priced the following 'AAA' rated bond transactions to fund projects adopted in the City's Capital Budget. General obligation bonds in the principal amount of $59,485,000 and certificates of obligation in the principal amount of $79,780,000 were priced by a syndicate led by Siebert Brandford Shank & Co., L.L.C. as Senior Book Running Manager, Piper Jaffray & Co. and Stifel, Nicolaus & Company, Inc. as Co-Senior Managers, and Frost National Bank, Loop Capital Markets, Rice Financial Products Company, and Wells Fargo Securities as Co-Managers. Tax notes in the principal amount of $9,445,000 were priced by a syndicate led by M.E. Allison & Company, Inc. as Senior Book Running Manager and RBC Capital Markets as Co-Manager.

The 'AA+' rated Lease Revenue Bonds in the principal amount of $27,925,000 were priced by a syndicate led by SAMCO Capital Markets, Inc. as Senior Book Running Manager, and FirstSouthwest and Ramirez & Co., Inc. as Co-Managers.

The City achieved excellent results in the pricing of the four transactions. During the order period for each of these transactions, there was strong demand from investors for the City's strong credit. The combined true interest cost on the general obligation bonds and the certificates of obligation was 3.68%. The estimated savings on these transactions comparing the City's 'AAA' bond rating and a lower rated 'AA+' credit is estimated to be approximately $3.2 million over the life of the debt. The combined true interest cost on the tax notes was 1.12% and 4.82% for the Lease Revenue Bonds.

SOURCE City of San Antonio