Louisville sells $45 million in bonds for capital projects, despite challenging economic environment
Louisville Metro Government (LMG) today sold $45 million of tax-exempt bonds to J.P. Morgan Securities LLC, with nationally recognized credit rating services Fitch, S&P Global Ratings, and Moody’s Investors Service providing the city bond ratings of AAA, AA, and Aa1, respectively.
Fitch’s AAA rating was based on their view that Louisville is “well positioned for the current downturn” and that it expects LMG “to manage through the current economic downturn while maintaining a strong level of fundamental financial flexibility.” S&P also cited a strong economy and strong management, while adding that it was lowering its rating from AA+ to AA due to “a challenging revenue climate and the pressure that we expect will come from absorbing perpetually larger pension contributions.”
The bond sale will provide long-term funding for capital projects from the FY19 and FY20 budgets that had been temporarily funded with a line of credit. The competitive sale generated bids from four companies and resulted in a True Interest Cost of 1.48 percent for the city.
“This has been a tough time for the country and for our city as we’ve confronted the COVID-19 public health pandemic, the resulting economic downturn, and our need to make greater investments in programs and initiatives to dismantle structural racism,” said Mayor Greg Fischer. “I’m thankful to the many public servants who have helped us persevere and allowed us to maintain our sound financial footing.”
The bond proceeds will fund a variety of projects from the FY19 and FY20 capital budgets, including the Affordable Housing Trust Fund and ongoing maintenance and repair projects, such as street paving, sidewalks, bridges, parks, the Zoo, and Metro facilities.
Moody’s report cited a credit strength of a sizable and growing tax base, along with “strong management, conservative budgeting practices, and adherence to formal fiscal policies” in affirming its second highest rating of Aa1 with a stable outlook for Metro Louisville. Fitch and S&P also provided a stable outlook for the city’s credit rating.
On Thursday (Oct. 15), the city’s Chief Financial Officer, Daniel Frockt, will be providing an update on the sale and credit reports to the Metro Council Budget Committee.