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November 21, 2013
City of Toronto's borrowing costs remain stable
The City of Toronto wants to clarify that its borrowing costs remain stable and are not rising in connection with recent media coverage regarding the Mayor.

"Recent events at City Hall have had absolutely no impact on our costs or our ability to borrow funds," said Joe Pennachetti, City Manager. "The City of Toronto interest rate spreads remain stable in relation to the underlying Province of Ontario bonds and in relation to other municipalities."

During September, the City successfully issued $300 million in bonds with a maturity of 10 years in a market with strong domestic and international investor demand and an interest rate spread of only 26 basis points (0.26 of 1%) over a comparable Province of Ontario bond issue which today has the same City of Toronto bond trading at a 25 basis point spread.

"We have seen no deterioration in the City of Toronto’s primary and secondary market interest rate spreads," said Rob Rossini, Deputy City Manager and Chief Financial Officer. "It is also important to note that while credit spreads vary on the secondary trading market, once the City issues a debenture, our cost of borrowing remains fixed on the bond until maturity."

The City's debt issuance banking group (including the major Canadian banks – RBC, CIBC, Scotiabank, TD, BMO and National Bank) has also indicated that investor demand for municipal bond issues continues to be very strong. Secondary trading and inventory of Toronto bonds continues to be at a two-year low, as seen in recent capital market activity.

During the past six months, the City of Toronto has continued to field inquiries about its plans to issue debt. There is considerable investor demand for Toronto bonds in the trading markets.

Most importantly, the City has strong credit ratings of AA+ from Moody's, and AA from Standard and Poor's and DBRS. These ratings are based on Toronto’s wealthy and diversified economy, low debt burden, very positive liquidity and positive financial management.

These excellent ratings reflect the expectation that the City's economy will continue to generate taxable assessment growth. As a result, Toronto, as the fourth largest city in North America, retains the highest credit rating amongst large North American cities.

Toronto is Canada's largest city and sixth largest government, and home to a diverse population of about 2.8 million people. Toronto's government is dedicated to delivering customer service excellence, creating a transparent and accountable government, reducing the size and cost of government and building a transportation city. For information on non-emergency City services and programs, Toronto residents, businesses and visitors can dial 311, 24 hours a day, 7 days a week.

Media Contact
Wynna Brown
Manager, Media Relations and Issues Management

Paula Chung
Communications Coordinator, Media Relations and Issues Management



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