Montclair Sees Lowest Interest Rates Ever In Bond Sale: Officials

MONTCLAIR, NJ — Montclair town officials believe that the municipality’s AAA rating was a big boost in the recent sale of $42 million worth of bonds.

Last week, Montclair saw the sale of $35.4 million in general improvement bonds, (Series 2020A) at an interest rate of 0.857761 percent, and $6.6 million in school bonds, (Series 2020B) at 0.793474 percent.

The general obligation (GO) bond sale on Sept. 23 received 66 bids from 11 bidders, while the school bond sale received 19 bids from three bidders. Fidelity Capital Markets won both bond bids.

Proceeds from the sales will provide for “various municipal and school capital improvements,” town officials said in a news release.

“This highly successful bond issue will help us further meet our capital investment and debt-service cost objectives,” Deputy Mayor William Hurlock said. “What’s more, we will be able to achieve our investment goals at a very low capital cost.”

“The numbers say it all,” 4th Ward Councilor David Cummings agreed. “This is another example of the township’s fiscal leadership proving to be one of the best in the state. Right now, we’re in a great position to look at necessary capital investments.”

The bond sale comes on the heels of last month’s AAA bond rating reaffirmation by Standard & Poor’s Global Rating Services, which assigned its highest rating to Montclair Township's 2020 general obligation improvement bonds and GO school refunding bonds. The agency also affirmed its AAA rating on the township's existing GO debt.

• See related article: Montclair Keeps Highest Bond Rating Despite Coronavirus Pandemic

The high ratings help lower the cost of borrowing for capital projects, thereby saving taxpayer dollars, officials said.

The difference between a “AA” and “AAA” rating is roughly 30 basis points, according to Township CFO Padmaja Rao.

By achieving a AAA rating, Montclair will save about $500,000 for this 10-year bond, Rao said.

“The AAA rating clearly demonstrates the township has the strongest creditworthiness and can sell its municipal bonds at a very low interest rate,” Mayor Sean Spiller said. “Standard & Poor’s AAA bond rating reaffirmation contributed to making our bonds very attractive to buyers.”

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