Orange Town officials announced excellent results from Wednesday’s $8.6 million taxable new money bond sale, along with a $4.715 million tax-exempt refunding bond sale, both of which yielded competitive interest rates on the strength of strong reviews from S&P Global Ratings, one of the three major Wall Street Rating Agency firms.
“It is great to see these results and the fact that our bonds were in such a high demand,” said First Selectman Jim Zeoli, “With the rates as low as they are right now, this will help keep the debt burden on the taxpayers as low as possible.”
The Town received a total of four bids on the New Money Bonds, with Morgan Stanley & Co. submitting the winning bid. Morgan Stanly beat out BOK Financial, Robert W. Baird, and Roosevelt & Cross to get the award.
The interest rates bid on those 20-year bonds, referred to as the “Series A” bonds, ranged from a winning bid of 2.05% to a high bid of 2.46%. The winning bid was very aggressive and beat out the second-place bid by 8 basis points (0.08). The bonds will provide the financing for the purchase of Racebrook Country Club which has been approved earlier this year.
The Town was also able to enter the market to refinance bonds that were originally issued at higher rates in 2012 and 2013 with the Series B Bonds. By refinancing those older bonds, the Town was able to save over $570,000 in interest costs on the remaining 13-year term of those bonds. Robert W. Baird & Co provided the lowest interest rate on this issue, coming in at 0.99% on the bonds. The rate is much lower than the Series A bonds since these bonds are tax-exempt but also because they have a shorter term than the 20-year new money bonds. Their bid was also aggressive and won by 6 basis points. It was a tightly contested competitive sale with rates from the second to fifth place bid being only 8 basis points (0.08%) apart.
“The great results were driven not only by the historically low municipal rate environment we are experiencing right now but also by the Town’s exceptional credit ratings and prudent long term financial management of the Town,” said Matthew Spoerndle, senior managing director of Phoenix Advisors and Orange’s municipal advisor. “The rating agencies continue to recognize the work town officials have done to keep Orange’s fiscal health strong over the years.”
In spite of clear macroeconomic challenges related to the pandemic, S&P affirmed Orange’s “AAA” rating, which is the highest rating available. Within the report, S&P referenced the Town’s “very strong economy…which we consider broad and diverse” noting the Town’s grand list growth and continued commercial activity. Also noted was the “very strong liquidity and strong budgetary performance” along with a “very strong debt profile” and noted the Town’s stable financial operations and low unemployment rate.
Finally, S&P mentioned that they view management as “strong, with good financial policies and practices” under their Financial Management Assessment.
The settlement date for the sale is June 11, 2021, after which the funds become available to the Town.