Cheshire Town Officials Announce $14M Bond Sale Results

Press release from the Town of Cheshire:

April 7, 2021

Cheshire Town officials are pleased to announce excellent results from Wednesday’s $14 million new money bond sale, along with a $9.7 million refunding bond sale, both of which yielded competitive interest rates on the strength of the affirmation of the Town’s AAA credit rating from S&P Global and Fitch Ratings.

“It is great to see these very positive results, and it’s gratifying that our bonds were in such a high demand,” said Town Manager Sean Kimball. “We have worked hard to achieve and maintain our AAA credit rating in order to help keep our debt service costs and the burden on our taxpayers, as low as possible.”

The Town received eight bids on the New Money Bonds, with Robert W. Baird & Co. submitting the winning bid. Baird beat out firms such as Bank of America Merrill Lynch, JP Morgan, Roosevelt & Cross, among many others.

“I am very pleased with the results of our recent bond sale which will save our community significant dollars in debt service,” said Town Council Chairman Rob Oris. “This is a result of our continued commitment to very sound fiscal policies as is evidenced by the recent reaffirmation of our AAA bond rating. Thanks to all involved for their extraordinary work during a difficult time.”

The interest rates bid on the 20-year New Money bonds, referred to as the “Series A” bonds, ranged from a winning bid of 1.57% to a high bid of 1.77%. It was a tightly contested competitive sale with bids from the second place to seventh place at a range of only 8 basis points (0.08%). The bonds will provide the financing for the Town’s various school, general purpose and sewer projects.

The Town was also able to enter the market to refinance bonds that were originally issued at higher rates in 2010, 2012 and 2013. By refinancing older bonds, the Town was able to save over $820,000 in interest costs on the remaining 11 year term of those bonds. Robert W. Baird & Co. provided the lowest interest rate on this issue as well, coming in at 0.93% on the bonds, narrowly edging out KeyBanc Capital Markets by 1 basis point (0.01) and four other firms including Roosevelt & Cross and JP Morgan. The rate is lower since these bonds have shorter terms than the new money bonds.

“These great results were driven not only by the current historically low municipal rate environment but also by the Town’s exceptional credit ratings and prudent long-term financial management,” added Matthew Spoerndle, senior managing director of Phoenix Advisors and Cheshire’s municipal advisor.

“The rating agencies continue to recognize the work Town officials have done to keep Cheshire’s fiscal health strong over the years.”

In spite of clear macroeconomic challenges related to the pandemic, both S&P and Fitch affirmed Cheshire’s “AAA” ratings, which is the highest rating available. Within the report, S&P referenced the Town’s “very strong economy…which we consider broad and diverse” acknowledging the current expansion and new developments ongoing. Also noted was the “very strong liquidity and strong budgetary performance” and the Town’s stable financial operations and low unemployment rate. Fitch also highlighted the Town’s long-term liabilities (debt and pensions) as being “low” with moderate future borrowing plans based on its capital plan, which is favorably viewed. Also favorable is the “rapid pace of principal amortization” on its bonded debt.

Finally, S&P mentioned that they view management as “strong, with good financial policies” under their Financial Management Assessment while Fitch touted management’s ability “manage the challenges” associated with the potential impacts of the pandemic “based on its superior level of inherent budget flexibility.”

The settlement date for the sale is April 20, 2021, after which the funds become available to the Town.

This press release was produced by the Town of Cheshire. The views expressed here are the author's own.