Town of Guilford Successfully Refinances $18,280,000 of Outstanding Bonds

This Wednesday, Nov. 14th, the Town of Guilford sent out the following Press Release:

Today the Town of Guilford successfully refinanced $18,280,000 of outstanding bonds.  The Town took advantage of all-time lows in municipal interest rates by refinancing bonds from its 2002A, 2002B, and 2008 series.  The prior bonds had originally been issued to fund capital projects including open-space land acquisition, school facility and athletic field improvements, public safety equipment and vehicles, a new Emergency Service building and the expansion at the Guilford Free Library.  The prior bonds were refinanced by the issuance of $17,480,000 in new bonds which were sold at premium in part due to the Town's strong credit rating.  The new refunding bonds carried interest rates ranging from 2% to 5% and have a final maturity of August 15, 2028.

As a result of the refinancing, the Town will save approximately $2,514,000 over the term of the bonds, including approximately $557,000 that will go towards reducing the fiscal year 2013-14 budget.  An additional $1,900,000 in savings will be realized in fiscal years 2014-15 through 2016-17 which will help offset future debt service related to the new high school building.  On a net present value basis, the aggregate debt service savings exceeded $2,389,000 or 13% of the prior bonds.

Following a Request for Proposal process, the Town selected Roosevelt & Cross, Inc. of New York, New York as the underwriter for the transaction.  The Town was assisted by Independent Bond & Investment Consultants of Madison as municipal advisor and Day Pitney LLP of Hartford as bond counsel.

The successful sale was aided by the affirmation of the Town's "Aa2" and "AA+" credit ratings by Moody's Investors Service and Fitch Ratings, respectively.  In its published report, Moody's cited the Town's "conservative budgeting practices and fiscal management" as credit strengths.

The Town benefited from the timing of the sale as the municipal market had rallied for seven consecutive trading sessions and set record low yields as measured by Municipal Market Data.  Municipal bonds have enjoyed a strong 2012 driven by investor demand as demonstrated by municipal bond funds reporting cash inflows in 58 of the past 62 weeks.  Additionally, municipal bond yields have moved lower in recent days due to concerns over higher marginal tax rates in 2013 as a result of the looming "Fiscal Cliff".