CLEARFIELD – On Monday night, the Clearfield school board voted to accept the winning bid and will now proceed with the issuance of the General Obligation, Series of 2016, bonds and the advance refunding of its G.O., Series of 2014.
Rates are currently well below the 10-year, historic average. “It’s a great time to go out in the market and borrow money and refinance debt,” said Wes Hall, senior analyst with Public Financial Management. “And, we’re very happy with the results, and hope you are as happy as we are.”
Hall noted as the district’s financial advisor, PFM did observe some volatility in the rates since the district’s initial refinancing plan presentation in September. He attributed it to a number of things but mainly the upcoming election and the possibility of the Federal Reserve increasing interest rates.
Moody’s Investors Service assigned an A1 rating to the district’s $9.5 million of G.O. Bonds, Series of 2016. According to Hall, this rating is due to the district’s healthy financial position as well as its strong reserve and liquidity levels.
Five bidders participated in the competitive Internet bond sale Monday afternoon, and there were 20 total bids. PNC Capital Markets was the winning bidder with a true interest cost of 2.61 percent.
This was the first step in the district’s three-step refinancing plan. It was done to issue the G.O., Series of 2016, bonds for the advance refunding of the G.O., Series of 2014, bonds. The savings locked in during the competitive bond sale was $634,737.
“We were very happy with that number,” said Hall, “especially given the recent volatility of the market … It really shows how the competitive Internet auction can bring in great results for the district.
“… This was way above the 3 percent target set at the last board meeting. It’s our recommendation that the board accept the bid from PNC.” The board voted to accept the bid later in the meeting.
In addition, the board authorized the administration to work with PFM, its bond counsel and solicitor to proceed with the issuance of G.O., Series A of 2016, and the G.O., Series of 2017, bonds.
The G.O., Series A of 2016, proceeds will be used toward the current refunding of its G.O., Series of 2011, bonds. The G.O., Series of 2017, proceeds will be used toward the advanced refunding of a portion of the G.O., Series of 2012, bonds.
Both will be done by a competitive Internet auction. The board has set a minimum net savings target for the G.O., Series A of 2016, and the G.O., Series of 2017, bonds at 2 percent and 3 percent, respectively.
PFM has estimated the district could realize a net savings of $137,598 by doing a current refund on the G.O., Series of 2011, and of $262,669 by advancing refunding a portion of the G.O., Series of 2012, bonds.