The City of Toronto has issued a new debenture for $350 million to help finance key capital projects. This is the City’s first debenture issuance this year, with a low all-in cost of 2.958 per cent.
This conventional bond issue, with a 30-year maturity and a coupon interest rate of 2.90 per cent, will mature on April 29, 2051. It was issued April 14 and will settle on April 29, 2021.
The proceeds from this issuance will be used to fund previously approved capital projects from several City divisions and agencies, including Toronto Transit Commission, Transportation Services, Environment and Energy, Corporate Real Estate Management, Facilities Management and Exhibition Place.
This issuance has a total of 36 buyers and was slightly oversubscribed. Despite the COVID-19 pandemic, demand for municipal bonds has remained strong, demonstrating the confidence investors have in the City of Toronto and the local economy.
Toronto has one of the largest municipal borrowing programs in Canada. It is a regular issuer in the public Canadian debt market, with several sinking fund debentures each year. Debenture issues are initially distributed and traded by several Canadian investment dealers. Retail investors can contact their financial institutions to inquire about investing in the City of Toronto’s debentures.
More information about the City’s Debenture Programs is available at https://www.toronto.ca/city-go
Quotes:
“Right now, investors are looking for stable investment opportunities, and the City is happy to deliver sustainable and financially responsible outcomes. The success of this deal is a positive indication how investors feel about the City of Toronto. The low cost of borrowing will help us finance more key capital projects that support the City’s recovery and rebuild efforts, and improve the City for years to come.”
– Mayor John Tory
“While capital markets remain volatile due to the COVID-19 pandemic, investors are positive about economic recovery, given the global vaccination rollout. Investor demand for municipal bonds with a long maturity is high – expressions of interest were greater than the amount for the $350 million being sold. This reflects the confidence investors have in the local economy and the City of Toronto’s credibility.”
– Councillor Gary Crawford (Scarborough-Southwest), Budget Committee Chair
SOURCE City of Toronto
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