Mayor Brandon Johnson and City of Chicago Announces Passage Of $1.5 Billion Bond-refinancing Plan to Lower Debt Costs and Achieve $110 Million In Savings
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CHICAGO ~ Chicago's City Council has made a significant decision to approve the issuance of $1.5 billion in General Obligation (GO) bonds and for the Sales Tax Securitization Corporation (STSC) to issue STSC bonds. This move, which was approved with a 32-12 vote, is part of Chicago's strategy for responsible debt management and is expected to generate approximately $110 million in present value savings.

Mayor Brandon Johnson expressed his satisfaction with the decision, stating that it reflects the city's commitment to sound financial management. He believes that this refinancing plan will help lower the city's costs and reduce pressures on its budget.

The plan involves replacing older, high-interest bonds with new bonds at lower rates, similar to refinancing a mortgage. It is projected to reduce the average interest rate from 5.62 percent to approximately 3.75 percent, resulting in significant savings for the city. However, the actual results will depend on market conditions.

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According to Chief Financial Officer Jill Jaworski, their goal with every bond transaction is to be responsible stewards of taxpayer dollars. This refinancing will not only help lower debt service costs but also reduce the city's overall debt load and directly address its budget deficit.

This GO/STSC refinancing is just one of several successful refinancings that Chicago has undertaken recently. Earlier this year, transactions for Midway Airport, O'Hare Airport, water system, and wastewater system have saved millions for the city.

The GO/STSC bonds are expected to be issued in the fourth quarter of 2024, taking advantage of favorable market conditions. In addition, over 40 percent minority underwriter representation will be included in this transaction as part of Chicago's commitment to equitable financial practices, which is comparable to previous city transactions.

Overall, this decision by Chicago's City Council aligns with their strategy for responsible debt management and demonstrates their commitment to sound financial practices. With this refinancing plan, the city hopes to achieve significant savings and reduce its budget deficit, ultimately benefiting its taxpayers.

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