Feb 24, 2010

The City of South Bend today closed on the transaction refinancing a 2001 bond, which financed construction of the Street Department garage. The action enabled the City to achieve two significant benefits for South Bend taxpayers.

First, the Standard & Poor's bond rating service upgraded the City's bond rating to AA- from A+. The rating upgrade was based on several credit-related factors, including strong debt service coverage, sufficient reserve balances and South Bend's diverse local economy, which serves as a regional trade and service center.

Second, the improved bond rating, coupled with a more favorable debt financing market compared with the original issue date, has resulted in a lower cost to borrow. This move will save South Bend taxpayers more than $1 million over the next decade.

"The financial stewardship under the direction of Mayor Steve Luecke, together with the financial policies practiced by the City over the last several years, have placed the City in a strong financial position, which has led directly to the improved bond rating," said City Controller Gregg Zientara. "The AA- rating is a reflection of the City's creditworthiness as well as strong management practices that have led to improved financial performance and position."

The rating upgrade came as the City of South Bend refinanced a 2001 bond on the Street Department garage to take advantage of lower interest rates. The bond is backed by county option income taxes (COIT). The City previously received an A+ rating when seeking to refinance the same bonds in 2009, but the rating was withdrawn because the bonds were not sold.

The AA- rating on the bond, anticipated to be paid off in 2021, will save the city $1,060,975 in reduced interest costs over the remaining life of the debt.

Standard & Poor's also gave AA- ratings to bonds recently sold or refinanced in other Indiana cities – including Bloomington, Carmel, Evansville and Fort Wayne.

Contact:  Mikki Dobski, Director of Communications & Special Projects, 235-5855 or 876-1564 or City Controller Gregg Zientara, 235-9216