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$100 Million Refinancing for the City of Newark

Newark, NJ – August 14, 2020 – Mayor Ras J. Baraka today announced the successful pricing of the City of Newark’s $100 million General Obligation Refunding Bonds, Series 2020 transaction. The strong investor demand for the bonds showcases continued investor confidence in the City throughout the COVID-19 pandemic.

Prior to the sale, Moody’s Investors Service affirmed its rating on the City and kept the outlook on the rating as positive. The Moody’s report highlighted the expectation that the City’s strong operations will continue as projected due to ongoing redevelopment and a significantly improved financial position. Since 2015, the City has grown its surplus by 112%, a notable improvement considering its zero-fund balance in 2014. In addition, on July 21, 2020, Mayor Baraka reported that the City is ahead of schedule with its lead service line replacement program and financing, and that crews are replacing about 75 lines a day during the COVID-19 pandemic.

The City and its financing team created a refinancing structure that will generate nearly $15 million in gross debt service savings, approximately $14 million of which is realized in 2020 and 2021. These cash flow savings will help mitigate some of the financial impact of the ongoing COVID-19 pandemic.

The transaction attracted broad investor interest, with an overall subscription nearly 11 times the amount offered. The City received combined retail and institutional orders from 34 different investors, totaling over $1.134 billion. Given the strong book of orders, the City was able to lower bond yields (or pricing spreads) by 11 to 13 bps for bonds maturing in years 2021 through 2028, and 5 bps for bonds maturing in years 2034 through 2039. This successful pricing led to an all-in interest cost of 1.36% and generated present value savings of $14.8 million (or 11.98% of refunded bonds) to the City.

The bonds were priced on Thursday, August 13, 2020 and are scheduled to close on Thursday, August 27, 2020. Siebert Williams Shank & Co., LLC, the nation’s top ranked minority and woman-owned business enterprise, served as the book-running senior manager. In addition, the transaction was staffed by a diverse financing team. The transaction was led by women and minority professionals, including the senior manager, co-managers, bond counsel, underwriters counsel, and the lead financial advisor.


Read the full press release here.

Written By: City of Newark Communication August 14, 2020


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