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Treasurer says district earned AAA rating and negotiated lower bond interest, saving taxpayers about $750,000
Summary
Treasurer Becky Jenkins told the board the district received an S&P upgrade to AAA, completed a bond sale with a 4.38% interest rate and sold retail portions of the issuance; the rating and sale produced roughly $750,000 in estimated savings versus earlier assumptions.
Treasurer Becky Jenkins told the New Albany-Plain Local Board of Education on Feb. 24 that Standard & Poor's upgraded the district's credit to AAA for the new issue and for outstanding debt. Jenkins said the district's recent bond sale resulted in an overall interest rate of 4.38 percent and that the AAA rating "saved the district about $750,000." She also said roughly $3.45 million of bonds were sold to retail investors.
Why it matters: a higher credit rating and a favorable interest rate reduce the district's borrowing costs and affect how much tax revenue will be needed to service debt on capital projects described in the campus master plan.
Details from the report
- Rating and sale: Jenkins said the rating analyst upgraded both the current issue and outstanding debt to AAA. She said the overall interest rate on the sale was 4.38 percent.
- Savings estimate: Jenkins said the AAA rating saved the district roughly $750,000 compared with earlier assumptions used in levy calculations (the administration previously modeled a 5 percent interest rate when estimating millage needs).
- Closing and bond proceeds: Jenkins discussed the bond closing and said the district expected proceeds tied to a $75 million financing plan; meeting remarks referenced a March 11 closing date for the issue.
Quote
"Having the AAA rating saved the district about $750,000," Jenkins said.
Context
Jenkins said the bonds were sold partly to retail investors and that the favorable pricing compared well with other large issuers that day. The administration said funds will be available to pay for Phase 1 master-plan projects once the issuance closes and the district finalizes project budgets.
Ending
Jenkins and district staff said they will continue to report updates to the board about bond proceeds, project budgeting and cash-flow timing as schematic costs are developed.
