Houston, Texas, issued $734.3 million in bonds to refund previously issued securities.
The city sold the bonds in two series. The Series 2024A bonds, consisting of $612.1 million, mature between 2025 and 2051, yielding between 3.03% and 4.38%. The Series 2024B bonds, consisting of $122.1 million, mature between 2025 and 2044, yielding between 3.03% and 3.8%. The securities received a rating of Aa3 from Moody’s Investors Service and AA from S&P Global Ratings.
“The Aa3 rating affirmation and stable outlook reflects the inherent strengths of the city’s credit profile including a solid financial position across all funds,” Moody’s analysts wrote.
The issuance comes after Hurricane Beryl wreaked havoc in eastern Texas, killing 18 people and knocking out power at more than 2 million homes. The city is still tallying the economic damage caused by the storm, but an early tally by AccuWeather has national costs at between $28 and $32 billion. That could make Beryl one of the costliest storms to hit Houston since Hurricane Harvey caused $2.3 billion in damages to the city in 2017.
These storms are becoming more likely as a result of climate change, scientists say. Houston has experienced four storms exceeding a 0.2% probability of occurring (also known as 500-year flood events) since 2015, according to the official statement accompanying the sale of the bonds.
Houston will use the issuance proceeds to achieve debt service savings by refunding bonds that it sold in 2014 and other notes.
The bonds are direct obligations of the city, payable by property taxes.
Ramirez & Co, Inc served as lead underwriter on the issuance, purchasing the bonds for $791.5 million. The price reflected a premium of around $60 million. Masterson Advisors LLC and the RSI Group, Inc acted as financial advisors.