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Willmar awards $8.305M bond sale to fund broadband after strong market demand; Moody's affirms Aa3
Summary
The council approved awarding $8.305 million in general obligation tax-abatement bonds to finance the Wilmar broadband project; municipal advisor Baker Tilly reported a competitive sale with a 3.934% yield and Moody's assigned an Aa3 rating to the issue.
The Willmar City Council voted to award the $8,305,000 general obligation tax-abatement bonds to the low bidder after municipal advisor Jake Emiat of Baker Tilly described a competitive sale and a favorable result.
Emiat told the council the bonds will fund acquisition, construction and installation of broadband infrastructure, capitalized interest and issuance costs. The issuance size was trimmed from an initial $8,460,000 to $8,305,000; total project costs presented were about $8,100,000. Emiat reported the sale produced a 3.934% interest (20-year structure) after competition from six bidders and noted the sale included premium maturities. He also reported that Moody's Investor Service assigned an Aa3 rating to the issue and affirmed the city's outstanding GO rating.
Council members asked about the 10-year call feature (redemption opportunities in 2036), capitalized interest (deferred interest commonly used for utility projects), and how the issuance affects future bond capacity and leverage ratios. Emiat said he would supply a breakdown of how the issuance affects the city's capacity and that the rating agency had been briefed on planned future issuances.
On a roll call the council approved the resolution awarding the bonds (5 ayes, 2 nays). The city will proceed with closing, capitalized-interest accounting for a short deferral period, and project procurement for the broadband network.
