Durham, North Carolina, issued $128.3 million in bonds to finance capital improvement projects and refund a previous issuance.
The bonds mature between 2024 and 2043. They received a rating of Aa1 from Moody’s Investors Service, AA+ from S&P Global Ratings, and AA+ from Fitch Ratings.
The rating reflects “the city’s strong revenue growth prospects from a growing tax base, significant independent legal ability to raise revenues, low long-term liability burden, and high level of financial flexibility that supports sound operating performance and the consistent maintenance of healthy reserve levels,” according to Fitch.
The issuance comes amid rapid growth in the city of Durham. The city’s population has increased more than 15% over the past five years, while general obligation debt per capita, a measure of fiscal sustainability, is a third of what it was in 2018. That has allowed the city to reap budget rewards; Durham collected $214 million in taxes last year and has increased its budget by 10% for the upcoming fiscal year.
The bonds will fund improvements to city infrastructure, parks, fire and police facilities, and information technology and communications systems. The proceeds will also refund bonds issued in 2013.
Durham is a city of almost 300,000 located in North Carolina’s so-called Research Triangle, which is known for its concentration of universities and technology companies. The bonds are limited obligations of the city, payable by annual appropriations and secured by a deed of trust on some government property.
PNC Capital Markets LLC served as lead underwriter on the issuance.