Featured Bond – City of Galveston to Issue $32 million in Capital Improvement Bonds
The City of Galveston is scheduled to issue $32 million in Capital Improvement Bonds to finance capital projects related to the city’s infrastructure and maintenance. The bond is scheduled for sale as a single series on the week of October 7th with Raymond James as the lead underwriter.
About the Bonds
Proceeds from the sale of the Capital Improvement Bonds will be used for a variety of infrastructure projects across the city. Along with the acquisition of rights of way, the city intends to build and rehabilitate streets, bridges, storm sewers, and drainage systems.
The Bonds constitute direct obligations of the city, payable from the levy and collection of a direct and continuing ad valorem tax, within the limits. In the opinion of Bond Counsel, the Bonds are excludable from gross income for federal income tax purposes and interest on the Bonds is not subject to the alternative minimum tax.
Moody’s and Fitch have granted this bond issuance a rating of Aa3 and AA, respectively.
Galveston lays on the Texas coast and is no stranger to threats from hurricanes. This bond issuance is coming just two years after the nearby Houston and much of the Gulf Coast was inundated by Hurricane Harvey. Capital improvements aimed at improving storm sewers and drainage systems are particularly noteworthy in this context.
In spite of the continued risk from hurricanes, rating agencies appear sanguine with regard to Galveston’s credit rating. Galveston is considered part of the greater Houston metro area, and thereby benefits from its proximity to Texas’ biggest city. Living on the coast also bring a range of benefits as well as risk. A strong maritime trade and tourism sector provides much stability to Galveston’s overall economic outlook.
Given the city’s history with hurricanes, the city takes seriously its responsibility to protect citizens and investments. See their website details about hurricane preparedness and financial transparency. These details and more on purposes, security, risks and other matters pertaining to these City of Galveston bonds can be found in the preliminary official statement, on MuniOS. After creating an account, you can find the bond issue by searching for Galveston.
Provided above is a quick snapshot of financial characteristics of the City of Galveston along with the medians for other sector issuers of all sizes, courtesy of Merritt Research Services, LLC. Merritt has many of the sector medians publicly available and regularly updated on their Benchmark Central page. (Merritt believes the data to be reliable but does not make any representations as to its accuracy or completeness).
These facts and numbers are for informational purposes, and should not be considered an official disclosure for potential investors. Investors should consult the official statement. None of the information provided should be construed as a recommendation by MuniNet Guide, MuniNet LLC, Merritt Research Services LLC, or any of their employees. Information and analysis is for informational purposes only.