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District sells $13.775M in capital loan notes; negotiates underwriting to cut fees and yields
Summary
The district approved a resolution authorizing $15 million capital loan notes sale against pebble funds for college-and-career projects; negotiated sale produced $13.775 million par with $1.224M premium, effective yield 3.3655% and district cost 3.576%, saving approximately $45,000 in underwriting fees.
The Cedar Rapids Board approved a resolution authorizing the issuance of general obligation school capital loan notes to fund college-and-career readiness projects at Washington and Jefferson after finance staff described a negotiated bond sale that lowered underwriting costs.
Carla (district finance staff) reported the district sold capital loan notes using a negotiated sale rather than sealed bids to reduce underwriting fees. Baird won the underwriting bid and charged 0.375% of the sale amount, saving about $45,000 versus a higher underwriting fee she said could be as much as 2% in other circumstances. The district retained its prior bond rating with a stable outlook for the sale.
Carla said the par amount was $13,775,000 with a premium of $1,224,000 and a coupon rate of 5.0%; because of the premium the bond yield was 3.3655%. When factoring upfront fees and total costs, the district’s effective cost was 3.576%, within the board’s previously authorized threshold of 3.85% for approving the sale.
Board members commended staff for diligence and for finding a way to save taxpayer dollars on financing costs. The board approved the resolution in a roll-call vote.
