Toronto Plans C$300 Million Bonds in First Half of 2014Ari Altstedter
Toronto will probably double borrowing to C$600 million ($570 million) in 2014 from this year, with half the issuance coming in the first six months, according to the city’s chief financial officer.
“Investors keep calling us asking us when are we going to do another debenture issue because they want to buy our bonds,” Rob Rossini, deputy city manager and CFO, said in an interview. “There’s strong demand for municipal bonds in general and strong demand for our bonds as well.”
The city council has approved as much as C$900 million of debt issuance for each year of the current four year term. The city also issued C$600 million in 2012.
Toronto’s borrowing costs have not increased since Mayor Rob Ford came under pressure to resign last week after admitting to smoking crack cocaine, the city said today in a statement.
The average extra interest rate for Toronto bonds increased four basis points, or 0.04 percentage point, to 94 basis points more than federal government benchmarks from Nov. 13 to Nov. 18, according to the Bank of America Merrill Lynch Canadian Provincial & Municipal Index. The city’s average spread fell to 89 basis points more than federal benchmarks as of the end of trading yesterday, according to the index.
Rossini said investors are not concerned with the turmoil at city hall.
“Our fiscal agents and our credit-rating agencies have said none of this impairs our ability to repay our debt,” Rossini said. “We are a very, very strong, high-quality credit rating.”
Moody’s Investors Service rates Toronto’s debt Aa1, while Standard & Poor’s gives the city a AA rating.