The Phoenix, Arizona, Civic Improvement Corporation issued $180 million in bonds to finance capital projects.
The bonds mature between 2025 and 2044, yielding between 3.01% and 3.71%. They pay interest at 5%. The securities received a rating of AA+ from Fitch Ratings, Aa1 from Moody’s Investors Service, and AAA from S&P Global Ratings.
The rating “reflects both solid post-pandemic growth prospects for pledged revenues and robust resilience,” Fitch analysts wrote.
The issuance comes amid a whirlwind of development in Phoenix. Over the past year alone, the city has won tens of billions of dollars in investment. Phoenix attracted 29 new employers in 2023, who added 703 jobs and pledged $30.5 billion in capital investment, according to the official statement accompanying the sale of the bonds.
Many of those companies are related to advanced computer chip manufacturing; in 2022, leading manufacturer Taiwan Semiconductor Manufacturing Company announced that it would invest $40 billion in Arizona. Other chipmakers, including Dutch giant ASML, have followed suit.
“Creating a semiconductor supply chain cluster in this region provides a range of other benefits to the industry and the broader economy,” the bond documents read.
The Civic Improvement Corporation is a blended entity of the city of Phoenix, created to help it acquire and finance municipal property and equipment. Phoenix will use the issuance proceeds to develop property in the city.
The bonds are special obligations of the corporation, payable by a subordinate lien on the city’s excise taxes. Phoenix collected $1.4 billion in excise tax receipts last fiscal year, a figure that the city expects will grow to $1.6 billion this year.
Truist Securities, Inc served as underwriter on the issuance, purchasing the bonds for more than $201 million. The price reflected a premium of $21.8 million. Public Resources Advisory Group, Inc acted as financial advisor.