The city of Anchorage, Alaska, issued $125 million in bonds to fund the city until 2023 property tax revenue is available.
The so-called tax anticipation bonds will have a tenure of less than one year, maturing on Dec. 15 of this year. They have an interest rate of 4.25% and a yield of 2.75%. The bonds were given a rating of SP-1+, which indicates a strong capacity to repay the bond’s principal with interest, by S&P Global Ratings.
“The Municipality has irrevocably pledged and covenanted with the owners of the Notes that it will levy and collect taxes upon all taxable property within the Municipality, without limitation as to rate or amount, in amounts sufficient, together with other funds legally available therefor, to pay the principal of and interest on the Notes when due,” according to the official statement accompanying the sale of the bonds.
The issuance comes as the city awaits its first batch of property tax revenue. The first half of the city’s property tax bill is due June 15 and the second half is due Aug. 15. Property taxes are the city’s largest source of revenue. Last year, the municipality collected nearly $600 million in tax levies with an assessed property valuation of around $36 billion. This year, it has assessed its property valuation at around $37 billion.
The bond sale is Anchorage’s latest debt obligation. The bonds are general obligations, meaning they are backed by the full faith and credit of the municipality. The city has more than $466 million in general obligation bonds outstanding through 2042. It has authorized but not issued an additional $104 million in bonds.
Anchorage is Alaska’s largest city and its commercial center. The bonds will support city-owned waste management and water utilities that are financed throughout the year by property taxes. The securities will also support Anchorage’s Climate Action Plan, which was adopted in 2019 to make the city more resilient in the face of climate change.
J.P. Morgan Securities, LLC served as lead underwriter for the bond issuance, purchasing the bonds for $1126 million. The acquisition reflected a premium of more than $1 million.