Moody's Aaa Rating & Bid Results February 2020

February 28, 2020: In anticipation of the Village's bond sale, Village Treasurer Irene Woo and Deputy Treasurer Darcia Palmer, along with fiscal advisor CMA, held a ratings call with Moody's Investor Service, Inc. On February 10, Moody's assigned the Village of Garden City an Aaa rating with a Stable outlook, citing in their credit opinion, "the village benefits from strong fiscal management, ample reserves and liquidity, minimal debt burden and manageable pension and retiree healthcare liabilities. Strong financial management continues to contribute to annual surplus operations."

On February 11, the Village sold Bond Anticipation Notes (BANs) and Bonds. According to Village Treasurer Woo, "The sale was extremely successful - there was great interest and a very competitive market, all bidders were very close."

BANs

The Village sold $35,750,000 in BANs for the Water Fund Emerging Contaminants Well Treatment on five well sites. There were seven bidders, and the winning bid was BofA Merrill Lynch, who offered a 5% coupon rate with a $1,443,227.50 premium. The Village will pay back interest of $1,782,534.72 next year, however, netting out the premium offered, the net interest rate is actually 0.9518%, which is an incredibly low rate. CMA, our fiscal advisor, stated that BANs for other municipalities who are not Aaa rated sold in the prior week in the 1.09 to 1.26% range.

Bonds

For the bonds, the Village received eight bids - again very competitive bids were received. The winning bid was to SWBC Investment Services at 0.859% True Interest Cost (TIC), which takes into account the time value of money. In addition, they offered $1,188,459.41 in Premium (which can only be used to pay down the debt).

Since the amount of premium is so high, the principal amount of the Bonds had to be adjusted so that the total par amount of the Bonds plus the premium received by the Village does not exceed the maximum amount permitted under the IRS codes. The adjusted amount of the bonds is $5,100,000, the premium is $1,075,212.53 and the true interest cost is 0.8652%. (The full amount needed for each project will be supplemented with the premium.)

The closing of the sale was completed on February 20.