City of Toronto issues $300 million bond to help fund key capital projects

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Ontario Construction News staff writer

The City of Toronto has issued a new debenture to help finance several capital expenditures from 10 different areas and agencies. This is the third debenture issuance this year and marks the lowest ever 20-year cost of funding for the city with an all-in cost of 2.218 per cent.

This $300 million conventional bond issue, with a 20-year maturity and a coupon interest rate of 2.15 per cent, will mature on Aug. 25, 2040. It was issued Aug. 11 and settled on on Tuesday.

“Expressions of interest were almost double for the $300 million sold. The success of this deal is a positive indication how investors feel about,” said Councillor Gary Crawford, budget committee chair.

“Funds from the bonds will ensure that we can make important investments to maintain and improve the city for present and future generations.”

This issuance has a total of 41 buyers but was oversubscribed by nearly double. It demonstrates the confidence investors have in the city and local economy.

Although COVID-19 has had a significant economic impact across the globe, capital markets are optimistically focused on rebuilding economies. Investor demand remains strong and the bond market continues to be favourable for the city to issue debentures.

The proceeds from this issuance will be used to help fund previously approved capital expenditures from several city divisions and agencies, including Shelter, Support and Housing Administration, Transportation Services, Toronto Public Library and Senior Services and Long-Term Care.

“Even in the midst of a global pandemic, an increasing number of investors are looking for stable and socially responsible investment opportunities,” said Toronto Mayor John Tory.

“The city is happy to partner with investors to deliver tangible, sustainable and financially responsible outcomes. The low cost of borrowing will help us finance more key capital projects that support the city’s recovery and rebuild efforts.”

Toronto has one of the largest municipal borrowing programs in Canada. It is a regular issuer in the public Canadian debt market, with several sinking fund debentures each year. Debenture issues are initially distributed and traded by several Canadian investment dealers. Retail investors can contact their financial institutions to inquire about investing in the City of Toronto’s debentures.

A staff report includes more information about the City’s Debenture Programs.


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