HomeMy WebLinkAboutIR 24-1850INFORMAL REPORT TO CITY COUNCIL MEMBERS
No. 24-1850
To the Mayor and Members of the City Council June 4, 2024
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Y Page 1 of 2
*a
rrn SUBJECT: 2024 DEBT PLAN — RATING OUTCOMES AND BOND PRICING RESULTS
Executive Summary
This informal report is intended to provide the Mayor and City Council with a summary of the final pricing
results and rating outcomes on bonds issued in connection with the City's 2024 Debt Plan including:
General Purpose Bonds, Series 2024; Tax Notes, Series 2024, collectively General Obligations or "GO
Debt" and Water and Sewer System Revenue Bonds, Series 2024 ("W&S Revenue Bonds").
Overview of Credit Rating Outcomes
On April 29, 2024, City Staff and the City's Financial Advisors met with credit rating agencies S&P Global
Inc. (S&P), Fitch Ratings Inc. (Fitch) and Kroll Bond Rating Agency, Inc. (KBRA) to obtain credit ratings on
the City's planned bond issuances.
We are proud to report all of the City's credit ratings were affirmed at current levels. Additionally, S&P
revised their outlook on the W&S Revenue Bonds rating to 'Positive' from 'Stable', reflecting the city's
improving financial metrics and progress completing key projects in its capital improvement plan.
Conversely, KBRA revised their outlook on the GO Debt rating to 'Stable' from 'Positive', primarily
attributable to the City's large, unfunded pension liability (55.1 % funded on an actuarial basis) and
contributions to the pension falling short of the actuarially determined contribution rate.
The credit rating agencies' affirmations of the City's existing GO Debt ratings are as follows:
• KBRA — AA+/Stable (outlook revised from positive);
• Fitch — AA/Stable; and
• S&P — AA/Stable.
In addition, the rating agencies' affirmations of the City's existing W&S Revenue Bonds ratings are as
follows:
• Fitch — AA/Stable; and
• S&P — AA+/Positive (outlook revised from stable).
For context, below is the investment grade rating scale:
FORT WORTH
AAA AA+ AA AA -
Prime High Investment Grade
A+ A A -
Medium Investment Grade
BBB+ BBB BBB-
Lowlnvestment Grade
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS
No. 24-1850
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To the Mayor and Members of the City Council
June 4, 2024
Page 2 of 2
SUBJECT: 2024 DEBT PLAN — RATING OUTCOMES AND BOND PRICING RESULTS
Consensus credit strengths of the City's property tax secured GO Debt include very strong financial
management, financial flexibility as evidenced by general fund reserves, and very strong liquidity.
Similarly, credit strengths of the City's W&S Revenue Bonds include strong management, a strong
operating performance, and strong liquidity.
Consensus credit weakness for the GO rating include a weak debt and contingent liability profile, primarily
attributable to the City's large pension and other postemployment benefit (OPEB) obligations. Significant
growth -related capital needs over the next 5-year period constrain the W&S rating.
The rating reports are accessible online at: https://www.fortworthtexasbonds.com
Overview of Final Pricing Results
With the assistance of the City's co -financial advisors, the City received bids on the bonds on May 21 st and
May 22nd. As the following bid results will demonstrate, the sales were a significant success as evidenced
by the number of bids received and the final borrowing costs (as measured by the True Interest Cost).
Below is a summary of the bid results:
True Interest Number of
Bond Issue Amount Sold Cost (TIC) Bids Received Winning Bidder
GO Bonds $ 153,535,000 3.77% 10 Bank of America
Tax Notes $ 16,055,000 3.18% 10 BOK Financial
W&S Revenue Bonds $ 148,305,000 4.26% 9 Wells Fargo
Next Steps
The Bonds are scheduled to close and deliver funds on June 18, 2024. We are pleased to share excellent
rating outcomes and pricing results. Special thanks to city staff, the City's financial advisors, and bond
counsel for their hard work and dedication to the credit rating and bond issuance process. If you have any
questions, please contact Reginald Zeno, Chief Financial Officer, at 817-392-8500.
David Cooke
City Manager
ISSUED BY THE CITY MANAGER
FORT WORTH, TEXAS