Branford Sells $45M in Bonds, Biggest Bond Sale in Town History
Ahead of Sale, S&P Global Ratings Reaffirms Town's AAA Rating
The Town of Branford has just completed the biggest bond sale in the history of the town. On Thursday, Oct. 10, the Town sold $45,000,000 in long-term bonds, (maturing over a 20-year period) through a competitive bid process, according to press release issued Oct. 11 by Branford First Selectman Jamie Cosgrove.
The release also noted that, in advance of the sale, Standard & Poors (S&P) Global Ratings reaffirmed Branford's long-term "AAA" bond rating, the highest assigned by S&P Global Ratings. Town officials say Branford's debt is attractive to municipal bond investors because of the Town's superior bond rating and reputation in the market.
Chicago-based Mesirow Financial Inc. purchased the bonds at an effective interest rate of 2.31%, following a bidding process where nine bids were submitted with effective rates ranging from 2.31 % to 2.63%, according to the press release. The release also noted Hilltop Securities Inc. of Madison assisted the Town as municipal advisor to the sale, with Joseph Fasi LLC of Hartford as bond counsel.
"Branford's financial strength distinguishes Branford from other public entities," Cosgrove stated in the release, adding "...it is refreshing that Branford's financial health is consistently recognized by a national rating agency whose reports and analysis are utilized by investors and institutions."
The Town also shared highlights from S & P Global Ratings' 2018 fiscal review of Branford and the Town's financial policies and management practices. According to the press release, S&P found Branford to have "...a very strong economy, with access to a broad and diverse metropolitan statistical area; strong management, with good financial policies and practices under [S&P] Financial Management Assessment methodology; very strong budgetary flexibility, with an available fund balance in fiscal 2018 of 25% of operating expenditures; very strong liquidity, with total government available cash at 44.3% of total governmental fund expenditures; strong budgetary performance with balanced operating results in the general fund; strong debt and contingent liability position, with debt service carrying charges at 6.4% of expenditures and net direct debt that is 66.5% of total governmental fund revenue; as well as low overall net debt at less than 3% of market value."
In the release, Branford Finance Director James Finch said Branford's financial position is attributable to "....prudent budgeting, coupled with the discipline of current and past officials including but not limited to the Board of Finance and RTM [Representative Town Meeting] in funding current and future liabilities."
Finch also said he was "very satisfied" with S & P Global Ratings' reaffirmation of the town's AAA rating.
As for the bond sale, Finch said Town officials strategically sought to issue more bonds than initially planned in order to take advantage of the low rate environment.
"This approach will take some of the guesswork out of future bonding costs and assist town leaders in developing future budgets," said Finch.
In recent years, Branford has bonded several significant projects. Proceeds from this bond sale will be used to help finance the renovations to the $88.2 million Walsh Intermediate School expansion/renovation project, the $12.1 million Community House expansion and renovation, and the $5.2 million Blackstone Library renovation and building addition, according to the press release.
In the press release, Cosgrove also noted, "While we anticipate an increase in our debt service costs in the near term, Branford taxpayers will not see a large spike in the debt service budget due to careful and deliberate planning."