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Arizona City Issues $277 Million in Bonds

By Munichain News Desk
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Mesa, Arizona, sold $277 million in bonds to finance improvements to its utilities systems and other capital improvements. 

The city sold both general obligation bonds and utilities system revenue bonds. The two issuances marked the largest ever bond sales by the city.

The general obligation bonds mature between 2024 and 2043, yielding between 3.31% and 4.22%. The utilities bonds mature between 2024 and 2048, yielding between 3.38% and 4.69%. The general obligation bonds received a rating of AAA from Fitch Ratings and AA from S&P Global Ratings. The utilities bonds received a rating of Aa3 from Moody’s Investors Service and A1 from S&P. (The agencies assigned insured ratings of A1 and AA, respectively.)

The general obligation rating “reflects Mesa’s superior operating performance profile, moderate long-term liability burden and solid expenditure flexibility,” Fitch analysts wrote. The bonds are backed by the full faith and credit of the city. 

The utilities bond rating “reflects the subordinate lien on the combined utilities net revenues and the fundamental strengths and weaknesses incorporated into the system’s priority lien bond rating,” Moody’s analysts wrote. The bonds are limited special obligations of the city, payable by net revenues from its utility systems.

The general obligation bonds will fund public safety, parks and recreation, library and streets and transportation projects. The utilities bonds will finance improvements to Mesa’s water, wastewater, natural gas, and electrical systems.

Mesa is the third-largest city in Arizona. The issuances bring the city to almost $2 billion in debt outstanding. 

Jefferies LLC served as lead underwriter for the general obligations bonds; BofA Securities, Inc served as lead underwriter for the utilities bonds.


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