Past month, the City of Toronto issued its second debenture in 2022 for $365 million to help finance key capital projects 7. This debenture issuance has an all-in cost of 4.354 percent.
This conventional bond issue, with a 30-year maturity and a coupon interest rate of 4.30 percent, will mature on June 1, 2052. It was issued on May 17 and settled on June 1.
The proceeds from this issuance will be used to fund Council-approved capital projects from several City divisions and agencies, such as Facilities Management, Real Estate, Environment and Energy, Solid Waste Management Services, Toronto Employment, and Social Services, and Toronto Public Library, TTC and Transportation Services. Some of the projects included in this issuance are Union Station construction, Accessibility for Ontarians with Disabilities retrofits, energy conservation and demand management programs, St. Lawrence Market North and South redevelopment, and transportation safety, road and bridge rehabilitation.
Despite sustained concerns about inflation, investor confidence in the City and Toronto’s economy continues to be strong and demand for municipal bonds remains high. This issuance was very well-received and has a total of 33 Canadian and international investors.
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’s debentures.
The City maintains an AA credit rating by S&P Global, an AA credit rating by DBRS Morningstar, and an Aa1 credit rating by Moody’s. These ratings reflect the City’s prudent financial management throughout the pandemic, strong financial support secured from other orders of government, and Toronto’s deep and diversified economy – factors that have helped sustain the City’s fiscal performance during the past two years.