Des Moines, Iowa, sold $94.4 million in bonds to finance various capital improvements, including upgrades to the city’s stormwater system.
The city sold the bonds in two series. The Series 2023A bonds, consisting of $72.6 million, mature between 2024 and 2043. The Series 2023B bonds, consisting of $21.8 million, mature between 2025 and 2043. The securities received a rating of AA+ from S&P Global Ratings.
“Des Moines’ strong economy, in our opinion, is stabilized by numerous government jobs, and anchors the broad and diverse metropolitan statistical area,” S&P analysts wrote. They added that the rating on the Series 2023B bonds further “reflects our assessment of a strong management team, that is proactive and committed to fund its capital improvement plan (CIP) through user charges, flood sales tax-increment tax, and other sources.”
The issuance follows newly passed state law that restricts the number of bond elections Iowa municipalities and school districts will be allowed to hold annually. Previously, such elections were possible up to three times per year; under legislation signed by Governor Kim Reynolds in May, those elections will now be restricted to once per year, in November.
While it is not yet clear what the impact of the law will be on municipal bonds in the state, market professionals point out that such issuances represent funding for needs rather than wants. As a result, the same amount of elections could occur, just on a more concentrated timeline.
The Series 2023A bonds will finance general improvements. The Series 2023B bonds will fund acquisitions, construction, and reconstruction that improves Des Moines’ stormwater utility.
The Series 2023A bonds are general obligations of the city, backed by its full faith and credit. The Series 2023B bonds are limited obligations, payable by stormwater utility revenue.