Chattanooga, TN (Thursday, November 2) – The City of Chattanooga on Tuesday offered and sold $42,485,000 in General Obligation Bonds to the competitive bond market. The City received 16 competitive bids to purchase the City’s bonds with UBS Financial Services Inc. submitting the winning bid at a true interest cost of 4.20% – an interest rate well below the current prime rate (8.5%) and the federal funds rate (5.5%), a nod to the prevailing robust economic conditions in Chattanooga. The City’s bonds were rated AAA by both Fitch Ratings and S&P Global Ratings, pointing to the city’s stable financial condition, its strong operational performance and reserve levels, and a healthy, diverse local economy,
The Bonds provide funding for the City’s fiscal year 2023 and 2024 capital projects, which include public safety interests like a new fire truck, fire training tower, and a law enforcement training center as well as vital infrastructure priorities like road and bridge repairs.
According to Chattanooga’s municipal advisor, PFM, the City’s bonds priced at interest rates 1-3 basis points (0.01%-0.03%) better than that of the BVAL AAA index. In the later years, the bonds priced 2-15 basis points (0.02%-0.15%) over the BVAL AAA index.
The City’s AAA rating is the highest rating level. The City’s ratings are estimated to have saved the City almost $700,000 over the life of the bonds compared to ratings of AA+.
The City last sold bonds in 2021 and received nine (9) bids. The City’s Finance & Administration Department and the City’s Municipal Advisor were pleased with the interest in the City’s bonds and the winning bid submitted by UBS Financial Services Inc.
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