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County bond adviser says market timing favors lower borrowing costs
Summary
Codington County’s bond adviser told commissioners Aug. 26 that recent market moves and strong bid demand are likely to lower the county’s long-term interest rate, improving the county’s borrowing position ahead of planned bond issuance.
Toby Morris, speaking to the Codington County Board of Commissioners on Aug. 26, told commissioners the county is positioned to see lower interest rates on its planned 20-year bond sale.
Morris said recent market news has pushed the premarket rate estimate for a 20-year fixed bond down from an August estimate of 4.51% to roughly 4.37–4.40%. “Now 10 basis points doesn't seem like much, but when you borrow $30,000,000, it actually equates to several $100,000,” Morris said, adding that strong demand and limited new issuance around Labor Day were also working in the county’s favor.
The presentation was an update; no formal vote on issuance occurred at the meeting. Morris said bids for the county’s construction package were due the same day and that the county would review the bid results and “lock in the rates” only after reviewing the bond purchase agreement and consulting bond counsel, Meyer Henry. He told commissioners that, if bids or pricing proved to be an outlier, the county would not proceed without further board approval.
Commissioners asked about next steps. Morris said the resolution already in place authorizes the chairman to proceed with routine bond-closing steps once numbers are confirmed; Morris described the near-term work as reviewing bids, confirming pricing and executing a bond purchase agreement if terms align with project costs.
The discussion included county staff referenced by first name who have been coordinating with Morris and the underwriters; no new county policy or levy action was taken at the meeting.
Looking ahead, Morris recommended continued review of final bids and counsel review of the bond purchase agreement before closing. The board did not take formal action on issuing bonds during the meeting.
