The City of Yuma is securing a competitive interest rate on the sale of the US $ 71 million benefit obligation

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In December, the city of Yuma sold $ 71 million in utility system revenue to fund improvements to its sewer system, increasing the wastewater capacity of the Desert Dunes Reclamation Facility to 3.3 million gallons per day. The city council has identified the expansion of the facility as a priority in the city’s strategic plan. The city was able to secure a competitive interest rate of 2.26 percent.

“We are very excited that the community is reaching this milestone,” said Jeremy McCall, Director of Utilities. “This expansion represents the continuous growth, investment and development within the city. Once the expansion is complete, the treatment facility will be able to meet the future needs of our thriving community. ”

The city commissioned Stifel, Nicolaus & Company as underwriter to support the bond sale.

When companies and governments issue bonds, they receive a credit rating from the three major rating agencies: Standard & Poor’s, Moody’s, and / or Fitch. In December, Standard & Poor’s upgraded Yuma’s long-term rating from A + to AA- and confirmed it to AA- by Fitch. The upgraded bond rating reflects a positive view of the city’s current finances, management and debt, including robust population and GDP growth in the Yuma economy, moderate utility rates that remained unchanged in fiscal years 2021 and 2022, a strong one Past debt service coverage and exceptional liquidity.

With the pricing on one of the last days before the winter break, the city’s commitments were well received and generated high demand, resulting in lower interest rates during the bond sale process. Realizing the volatility of current interest rates, the city and its insurer quickly tried to secure a competitive interest rate of 2.26 percent. The city had expected a higher interest rate. Over a 20 year period, this lower rate results in an estimated present value savings of $ 462,000.

“It’s been a great job of the city’s staff over the past year managing the finances and the city council prioritizing strategic investments during a low-interest cycle,” said Mayor Douglas Nicholls. “Ultimately, the people of Yuma’s tax dollars will have the greatest impact in growing our community and keeping it open to future opportunities.”

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