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Buffalo sells bonds at lowest interest rates in city’s history

April 18, 2012
Press Release

Capitalizing on its improved bond ratings, Buffalo sold three bonds Tuesday at the lowest interest rates in the city's history, including a refunding bond that will save taxpayers more than $1.6 million in interest costs.

"The city was rewarded by the marketplace for its sound fiscal management," said Buffalo City Comptroller Mark J.F. Schroeder, who commended Mayor Byron Brown. "These deals will save Buffalo taxpayers a great deal of money."

The city sold the bonds at an auction that took place a week after Moody's, one of the Big Three national credit rating agencies, upgraded the city's bond rating to A1. Buffalo is also in the A category with the other two agencies, earning an A+ from Fitch and an A from Standard & Poor's.

Raymond James and Associates, Inc. was the lowest bidder for the $21.6 million general improvement bond, offering the city an interest rate of 2.48 percent. The company also won the bid for the $13.2 refunding bond, with a 2.25 percent interest rate.

"The refunding bond, similar to a homeowner refinancing a mortgage, will save the city more than $1.6 million by reducing the interest rate on existing debt by more than half," said Schroeder.

UBS Financial Services Inc. was the lowest bidder on the $5 million bond for the city's school district, offering an interest rate of 2.96 percent.

"Buffalo has never even come close to interest rates below 3 percent on its bonds before these deals," said Schroeder, adding that it is also the first time the city has sold debt without needing to purchase bond insurance.

"Our rising bond ratings allowed the city to not only borrow at a lower interest rate, but also save money on bond insurance premiums," said Schroeder. "Our increased creditworthiness is paying off, and taxpayers are reaping the benefits."

Brown agreed with Schroeder's assessment.

"My administrations proven fiscal management has helped to keep the City of Buffalo strong," said Brown. "Our efforts to improve the city's bond ratings are really starting to yield positive results. I was pleased to learn today that we were able to sell bonds at the lowest interest rates in the city's history, capitalizing on an opportunity to help our city continue to move forward. Securing low interest rates will enable Buffalo to save money on investments that improve the quality of life in the city."

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