PHILADELPHIA — The City of Philadelphia successfully priced approximately $872 million of General Obligation (GO) Bonds that will both fund investments like paving and improvements to police, fire and parks and recreation facilities and will provide almost $21 million in savings on existing bonds.
In a combined new money and refunding transaction on Tuesday, June 10, the City issued $419 million to fund approved capital projects and refunded $470 million in previously issued bonds for savings through two different strategies: a traditional current refunding and a tender exchange to save a combined $20.6 million on a net present value basis.
During the sale, the City took advantage of strong investor demand to reduce overall borrowing costs. The City issued two types of new money bonds. The tax-exempt portion received 2.9 times the interest relative to bonds available from over 60 investors. The taxable portion was approximately six times oversubscribed with interest from nearly 40 investors. This additional demand enabled the City to achieve lower interest rates on the bonds, increasing savings by approximately $1.3 million and reducing its debt service costs by more than $7 million over the 20 year life of the bonds.
“The fact that investors are so interested in purchasing our bonds is very positive news,” said Mayor Cherelle L. Parker. “They recognize the City’s commitment to fiscal health and our strong financial management.”
As part of the transaction, the City also took advantage of current interest rates to complete a current refunding and its second tender transaction to refinance outstanding bonds for savings. Through the tender offering, the City bought back a select amount of outstanding GO bonds from bondholders that met certain savings criteria and issued lower-cost debt to fund the purchase value. The City initially offered approximately $480 million in bonds for tender and received offers for over $224.7 million, a participation rate of 46 percent, exceeding the pre-transaction estimates of $149.3 million, or 31 percent participation. Ultimately, the City accepted offers on $208 million of bonds that met its savings criteria. Combined, the refunding and tender resulted in $20.6 million net present value savings (4.08 percent).
In advance of the sale, the rating agencies affirmed the City’s existing credit ratings. The bonds were rated A1 by Moody’s Ratings and A-plus by Fitch Ratings and S&P Global Ratings. In the last two years, Moody’s, Fitch and S&P have all upgraded the City’s rating. Philadelphia now has its highest combination of bond ratings in more than four decades. In general, higher credit ratings result in lower borrowing costs.
“We were pleased at the overall strong investor demand for our bonds and the participation levels in our tender offering,” stated Jacqueline Dunn, City Treasurer.
BofA Securities led the transaction with Loop Capital as the co-senior manager. PFM and Phoenix Capital Partners are co-municipal advisors. The bonds closed on Wednesday, June 18, 2025.