Municipality to save millions using municipal bond

The City of Calgary is projecting savings of $1.6 million annually for the next 10 years via its first municipal bond.

On March 25, 2024, the city successfully closed its municipal bond for the purpose of borrowing money at a lower interest rate than via the provincial government. Ten-year borrowing rates from the provincial government are currently 4.86% whereas the municipal bond is offering 4.2% interest.

Despite being the first of its kind for Calgary, the response from investors was overwhelming. The bond closed at $180 million and investors’ interest was almost twice as much.

Participation in the municipal bond is made up predominantly of asset managers (44%), government (20%) and insurers (15%).  The geographic distribution of participants spans Quebec (34%), Ontario (27%), British Columbia (15%) and Europe (11%).

Canadian municipal bonds have been around for many years, but they have typically only been issued directly via very large Canadian cities or provincial financial/loan authorities. This may become a trend in the future as more municipalities look for innovative ways to limit the amount of interest paid on their debt.

For more information, please contact danb [at] abmunis.ca (Dan Blackburn), Senior Director of Growth & Innovation.