School bond secures favorable interest rate
District sells $88.9 million bonds at 3.69 percent interest rate
The school district was able to secure a 3.69 percent interest rate – lower than what was estimated – during the sale of the community-approved, 30-year $88.9 million in bonds, the proceeds of which will be used to conduct the planned building upgrades. File photo by JAIME ANTON
NORTH ROYALTON – The North Royalton School District secured a total interest rate of 3.69 percent at the July 25 bond sale totaling $88.9 million, proceeds of which will be used to fund its upcoming building projects.
The sale occurred in St. Louis, and during the 1.5-hour order period, the school district’s bond issue received over $350 million in orders from 53 different investors. A sampling of those investors included Vanguard, Eaton Vance, State Farm Insurance, Travelers Insurance, Wells Capital Management, American Family Insurance, Boston Company, Nuveen Advisory Corp., Norther Trust, JP Morgan, Credit Suisse Asset Management, Key Bank, Huntington Trust Company, US Bank, Blackrock and Goldman Sachs.
The district was able to successfully the entire bond amount at a weighted average true interest cost of 3.69 percent, which closes Aug. 15. At that time, the bond proceeds will be forwarded to the district.
School Treasurer Biagio Sidoti called it a successful sale for the district, and said the demand for the schools’ bond helped lower the interest rate. The rate is lower than what the district had estimated.
“This overwhelming demand for the district bonds allowed for a downward adjustment of interest rates to a true interest rate cost of 3.69 percent,” he said. “By all matrices, this issue was a successful sale for the district.”
In preparation of this bond sale – which provides the funding to construct the new elementary school, renovate the middle school and demolish and rebuild the '50s and '60s section of the high school and renovate the '70s and '80s portion, a plan voters OK’d May 2 – the school district had a formal presentation with Moody’s Investors Services on July 11.
The financing plan and schedule, district profile, levy structure and tax rates, expenditures, financial status and credit highlights were discussed at length. Following that meeting, Moody’s issued the school district an Aa2 rating, the third-highest rating.
Moody’s credit opinion highlighted several strengths: a sizable residential tax base with above average socioeconomic characteristics, strong financial reserves and liquidity and a positive operating trend largely a result of stable operating revenue and management’s effectiveness in restraining expenditure growth.
School officials said this strong credit rating was instrumental in the achieving the pricing result the district was able to obtain.
“Our strong credit rating is a reflection of all the hard work and collaboration among everyone associated with the district,” Superintendent Greg Gurka said. “The positive interest rates will allow us to invest the dollars where they need to be and that is on the education of our children.”
The district is expected to receive a full report soon detailing the amortization schedule, which includes the total cost of the bond with this 3.69 percent interest rate.
The sale occurred in St. Louis, and during the 1.5-hour order period, the school district’s bond issue received over $350 million in orders from 53 different investors. A sampling of those investors included Vanguard, Eaton Vance, State Farm Insurance, Travelers Insurance, Wells Capital Management, American Family Insurance, Boston Company, Nuveen Advisory Corp., Norther Trust, JP Morgan, Credit Suisse Asset Management, Key Bank, Huntington Trust Company, US Bank, Blackrock and Goldman Sachs.
The district was able to successfully the entire bond amount at a weighted average true interest cost of 3.69 percent, which closes Aug. 15. At that time, the bond proceeds will be forwarded to the district.
School Treasurer Biagio Sidoti called it a successful sale for the district, and said the demand for the schools’ bond helped lower the interest rate. The rate is lower than what the district had estimated.
“This overwhelming demand for the district bonds allowed for a downward adjustment of interest rates to a true interest rate cost of 3.69 percent,” he said. “By all matrices, this issue was a successful sale for the district.”
In preparation of this bond sale – which provides the funding to construct the new elementary school, renovate the middle school and demolish and rebuild the '50s and '60s section of the high school and renovate the '70s and '80s portion, a plan voters OK’d May 2 – the school district had a formal presentation with Moody’s Investors Services on July 11.
The financing plan and schedule, district profile, levy structure and tax rates, expenditures, financial status and credit highlights were discussed at length. Following that meeting, Moody’s issued the school district an Aa2 rating, the third-highest rating.
Moody’s credit opinion highlighted several strengths: a sizable residential tax base with above average socioeconomic characteristics, strong financial reserves and liquidity and a positive operating trend largely a result of stable operating revenue and management’s effectiveness in restraining expenditure growth.
School officials said this strong credit rating was instrumental in the achieving the pricing result the district was able to obtain.
“Our strong credit rating is a reflection of all the hard work and collaboration among everyone associated with the district,” Superintendent Greg Gurka said. “The positive interest rates will allow us to invest the dollars where they need to be and that is on the education of our children.”
The district is expected to receive a full report soon detailing the amortization schedule, which includes the total cost of the bond with this 3.69 percent interest rate.