Chesapeake, Virginia, sold $78.1 million in bonds to refund previously issued securities.
The bonds mature between 2025 and 2047, yielding between 3.1% and 4.2% They received an insured rating of AA from S&P Global Ratings, which assigned an underlying rating of AA-. Fitch Ratings also rated the underlying bonds AA- and revised its outlook to positive from stable.
The city will use the issuance proceeds to refund bonds that it sold in 2012 to finance Chesapeake Transportation Authority (CTA) upgrades.
Fitch analysts wrote that their revision “reflects the strengthening credit profile” of the CTA’s toll system. Toll revenue forms the backbone of the security for the issuance.
Population growth in Chesapeake has outpaced state and national levels in recent years. The city grew by an average of 1.1% annually between 2000 and 2022, compared to 0.9% in Virginia and 0.8% nationally, according to the official statement accompanying the sale of the bonds. A larger population generally increases a city’s economy, and therefore its tax base; more drivers on the road means more toll revenue.
Chesapeake is now home to 250,000 people. It is in southeastern Virginia, forming a metropolitan area with Norfolk, its northern neighbor of around the same size. The bonds are special, limited obligations of the city of Chesapeake, payable by CTA revenue.
BofA Securities, Inc served as lead underwriter on the issuance, purchasing the bonds for almost $80 million. The price reflected a premium of almost $2 million. Raymond James & Associates, Inc acted as municipal advisor.