Detroit, Michigan, sold $46.3 million in bonds to finance capital improvements.
The bonds mature between 2025 and 2039, yielding between 3.3% and 3.8%. They pay interest at 5%. The securities received a rating of Baa2 from Moody’s Investors Service and BBB from S&P Global Ratings.
“The issuer rating is Baa2 because the city’s economic and tax base growth will help it maintain financial resiliency and strong financial ratios through at least fiscal 2024 and 2025,” Moody’s analysts wrote.
Moody’s and S&P each upgraded Detroit in the Spring, bringing the city’s issuer rating to investment grade for the first time since 2009. In June, Detroit’s Downtown Development Authority sold $200 million in bonds with an investment grade rating.
Detroit officials celebrated the return. The city’s finances are still scarred by its declaration of bankruptcy in 2013, which at the time was the largest municipal bankruptcy in U.S. history. “No one in 2014 would have predicted Detroit returning to investment grade in less than a decade,” Detroit Mayor Mike Duggan said in a statement in March.
The bonds are general obligations of the city, backed by its full faith and credit.
Wells Fargo Bank, NA, served as underwriter on the issuance, purchasing the bonds for more than $50 million. The price reflected a premium of almost $4 million. Public Resources Advisory Group, Inc acted as municipal advisor.