Village Sells $630,000 Bond At 3.3%
Wed, 11/19/2008 - 16:23
Molly Roberts, the Village's Assistant Village Manager and Finance Director obtained a 3.298% effective rate for a one-year $630,000 bond to pay for part of the cost of acquiring the Bryn Du Mansion. Roberts put the bond out for bid and received offers by the 11:00 am deadline yesterday.
Roberts received three bids for the bond:
National City Bank: 7% Park National Bank: 4.2% Sweeney Cartwright & Co: 3.298%
Sweeney Cartwright & Co, the low bidder, is a Columbus investment bank and bond brokerage.
Assistant Manager Roberts had told the Village Council at their November 5 meeting that she expected to sell the bond anticipation note for one year at a rate of about 4%. She indicated that last year's note was for 3.6%.
Roberts said, "I'm surprised and pleased with the low bid."
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Bid bonds competitively
Congratulations to Village Finance Director Molly Roberts for bidding the village's bonds and getting such a great interest rate.
I hope the Township now competitively bid its $750,000 in bonds. Fiscal officer Norm Kennedy said the bonds weren't bid because of the financial turmoil of a month ago. He also said the bonds carried no prepayment penalty. So let's put them out to bid now. It seems highly likely we'd get a market rate today, much better rate than 5.4%.
The Village and school district have made a real committment to fiscal prudence recently. Let's hope the Township joins the club.
Great idea YesMan
Excellent idea YesMan.
Norm, what say you?
Township wasting money again?
Refinance the debt.
The average yield on five-year, AAA-rated, tax-exempt municipal bonds has fallen in the last month from 3.86% to 2.97%, according to Bloomberg. That's nearly a one percentage point drop and reflects the restoration of liquidity to the tax-exempt market.
The Township borrowed $750,000 at a 5.4% rate, without competitive bidding, near the peak of the liquidity crisis. The fiscal officer says there's no prepayment penalty. So there's really no excuse not to seek a lower interest rate. At its simplest, the Township could ask its lender to cross off 5.4% and write in the number 4.4%. Anyone who has refinanced a mortgage knows how much money can be saved by lowering a loan's interest rate by one percentage point.
The failure to get a lower interest rate would further the Township's reputation as an improvident manager of taxpayer funds.