Boston will go to market again on Wednesday with $238 million of new-money and refunding general obligation bonds sold through competitive bid.
“We tend, at least in recent years, to sell in February and March,” said Meredith Weenick, the city’s chief financial officer. “It’s a good time to look at our current spending and size it right.”
Boston will sell the bonds in three series. They are secured by the city’s GO limited-tax pledge, since debt service is not exempt from the levy limitations imposed by Proposition 2-1/2, an initiative petition Massachusetts voters adopted in 1980.
Series A, worth $122 million, will provide new-money long-term financing for the 2012 capital improvement program.
The other two series are refundings. Series B bonds will refund select maturities of outstanding Series 2002A and B, 2003A, 2004A and 2005A GOs, for an expected savings of $7 million. Series C bonds, along with $36 million in reserves, will refund the city’s 2002 Boston City Hospital special obligation bonds, for an expected savings of $7.9 million.
Public Financial Management Inc. is the city’s financial advisor. Edwards Wildman Palmer LLP is bond counsel.
“We’re very attractive as a city, but also as a credit. We have a conservative debt profile. From a financial management perspective, we have a stable team and a history of success,” Weenick said.
According to Moody’s Investors Service, Boston’s debt portfolio is all fixed rate, with no derivatives. Moody’s rated the bonds Aaa, while Standard & Poor’s assigned a AA-plus.
“Core industries in health care, higher education, financial services, technology and tourism give the city a multifaceted economic base that has withstood slowdowns in certain sectors without severely affecting the overall economy,” Standard & Poor’s said in a report.
Boston has several redevelopment projects in the works, most notably along the South Boston waterfront, where Vertex Pharmaceuticals Inc. broke ground last year for a two-building complex with more than 1 million feet of office space at the Fan Pier development.
Late last summer, when Massachusetts lobbied the rating agencies for an upgrade, Northeastern University economics professor Alan Clayton-Matthews told them that the state’s educated work force will help it adjust more quickly to an innovation-oriented economy than other states.
Shortly after the pitch, Standard & Poor’s elevated the state’s GO rating to AA-plus from AA.
The Series A bonds will also help fund a new library in East Boston, a peninsula neighborhood and home to Logan International Airport.
The library, which Weenick called “one of the signature projects for Series A,” will more than double the size of the current public space of both East Boston branches combined.
Centrally located within East Boston — on the edge of the Bremen Street Park and adjacent to the East Boston Greenway — it will replace two older facilities on Meridian Street and Orient Point, at each end of the peninsula. Construction is scheduled for the spring, with an opening targeted for fall 2013.
Boston last year took steps to reduce its pension liability, appropriating $82 million in its fiscal 2011 budget and transferring a further $35 million into its other post-employment benefits.
According to Standard & Poor’s, Boston’s unfunded pension liability was $3.05 billion as of June 30, 2011, compared with $4.69 billion two years earlier. S&P pegged Boston’s pension funding level at 72%.
The city, which expects to fully fund its pension fund by 2025, passed a law creating a public employee committee that will serve as the negotiating body for future health care changes, removing such deliberations from the collective bargaining process.
Boston issued $181 million of bonds in March 2011, supplementing its GO offering with $42 million of taxable qualified school construction bonds.