Charlotte, N.C., will close May 7 on a $171 million deal that saw significant refunding savings as well as low borrowing costs at pricing, according to Treasurer Scott Greer.

The $123.14 million of Series B certificates of participation priced April 18.

Proceeds will provide the first tranche of funding for a $1.2 billion, 9.3-mile extension of the city's light rail system connecting the University of North Carolina at Charlotte campus to downtown. It will double the mass transit system, Greer said.

The double-A rated new-money COPs priced with two maturities in 2022 with 3% coupons.
One maturity yielded 2.39% and the other yielded 2.49%. The all-in true interest cost, or TIC, was 2.81%.

The city also privately placed $300 million of bonds with Bank of America Merrill Lynch to use as a construction draw-down program to provide cash flow for the early years of the rail program until state and federal grants supporting the project are received.

Charlotte also priced a 20-year, $47.84 million COP refunding April 18 with an all-in TIC of 3.11%.

The refinancing brought present-value savings of about $10.1 million or 19% of refunded par.

"I would say [the refunding] met or exceeded our expectations," said Greer, adding that it sold about 7 basis points better than was projected. "All of our refundings the last two years have received incredible [savings] numbers."

In late 2012, the city refunded $25 million of triple, triple-A rated storm water bonds that realized $5 million, or 20%, in savings.

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