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Boston Stands Out in 2020 Bond Sale

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January 7, 2021


First-ever issue of Green Bonds; benefits from high credit ratings

The City of Boston’s strong financial standing and go-to-market timing were instrumental in its successful December 9th bond sale where the City issued $272.0M in General Obligation (GO) bonds. The City delayed its bond sale from March, when Boston has typically gone to market, to the fall, largely due to pandemic-related market uncertainty in the spring and for cash flow benefits from diversifying the City’s principal payment schedule.

For the first time the City issued green bonds, with proceeds totaling $32.1M for energy efficiency and climate resiliency projects—a significant part of the City’s goal to advance sustainable investments as part of its environmental, social and governance (ESG) initiative. The sale also included social bonds with total proceeds of $35.0M for affordable housing projects to be carried out by the Boston Housing Authority (BHA). The green bond and social bond sales combined produced savings worth $11.2M, which will be realized over the next 14 years.

For the first time in 20 years, the City went to market with a negotiated sale approach instead of a competitive sale. Using a negotiated method of sale enabled Boston to sell to both individual and institutional investors, providing the City the chance to expand its investor base and prioritize retail investors and smaller, local buyers. In a competitive sale investment banks bid against each other on a predetermined auction date and the issuer goes with the best price, with the winning bank reselling the bonds to investors at its discretion. A negotiated sale involves engaging a group (or “syndicate”) of underwriters with which an issuer negotiates terms of the bond purchase in advance.


  • $272M total representing five different bond series, three of which are new borrowings worth $180.5M.
  • $58.4M = Total interest on new borrowings
  • $30.0M = Premium resulting in total proceeds for new project spending of $210.6M
  • True Interest Cost (TIC) of 1.408% significantly lower than the 2019 TIC of 2.749%, largely due to a low interest rate market, deal structure & strategic timing of sale.

Highest Ratings Reaffirmed 
Moody’s reaffirmed its highest bond rating of Aaa for Boston, first awarded in 2011, and S&P Global reaffirmed its AAA rating, which was first awarded in March 2014 (see ratings going back to 1973 here). Both agencies identified environmental risks that Boston faces, including storm and sea rise vulnerability, but noted city management has made proactive efforts to manage these risks.

What the Rating Agencies Say *

Positive Factors Benefiting Boston:


Constraining Factors Being Watched:

  • Strong local economy driven by life sciences, finance, medicine, higher education and professional services with access to a well-educated workforce.


  • High personnel costs tied to collective bargaining with strong unions, including contracts for the city’s four police unions that expired in FY20.

  • Large and diverse tax base of $179.8B (2019-2020 equalized value), which has grown 74.6% or $76.8B since 2013.  New development in FY21 is projected to be in line with prior years.


  • Growing long-term unfunded liabilities for pensions and retiree health care (OPEB) relative to year-to-year budgetary growth.

  • Strong city and financial management resulting in consecutive surpluses and budgetary flexibility to meet short- and long-term policy goals.


  • Education spending challenges, including COVID-19 impact on state aid for education and managing services for a diverse student population.

  • Manageable debt levels from stable revenue generation and conservative debt policy.


  • Potential impact on budgetary performance related to public health and economic conditions.

  • Maintenance of healthy reserves and strong cash position of $1.4B (40.8% of general fund revenues) at the close of FY19.



_* _Based on November 2020 Moody’s and S&P Global credit reports.

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