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Restructuring of district bond debt saves taxpayers another $6 million

On Thursday, October 2, 2014, the Cherry Creek School District successfully sold $37,585,000 of District General Obligation debt for a savings to taxpayers of $6 million.

The bonds were sold competitively with bids received electronically via the internet. The winning bid was submitted by J.P. Morgan Securities with a True Interest Cost of 1.69%. The cover, or second best bid, was submitted by Bank of America Merrill Lynch.

There were nine additional firms that submitted bids including Piper Jaffray, Citigroup Global Markets, Raymond James & Associates, Morgan Stanley and Wells Fargo Bank as the next best bidders.

The issue refinances $43,540,000 of Series 2005 bonds which were outstanding and which carried an interest rate of 4.18%. The bond issue was structured as tax exempt bonds maturing over the period 2015-2024. Guy Bellville, Cherry Creek School District CFO, said that he was extremely pleased with the number of bids and the outstanding results.

"This transaction reduced the outstanding debt by almost $6 million dollars, while also lowering the average interest rate from 4.18% to 1.69%," Guy Bellville, Cherry Creek School District Chief Financial Officer said. "The resultant savings are passed directly to the taxpayers of the District through an average reduction in tax collections of $558,000 per year from 2015 through 2024.

"The total present value savings are 12.9% of the par amount of the refunded bonds which is an exceptionally large savings," Bellville said.

Late last year on December 5, 2013, the Cherry Creek School District also successfully sold $31,215,000 of District General Obligation debt for savings of $4.2 million. 

According to the District's financial advisors, the very aggressive bids received today are a reflection of the investor demand for high quality bonds as well as the historically low interest rates existing today.

Cherry Creek is an extremely strong credit, as evidenced by the Aa1/AA ratings assigned by Moody's and Standard & Poor's, respectively; and the strong bids received and the number of bidders that participated are a reflection of the District's quality, as perceived in the credit markets.

 

 

Posted 10/7/2014 2:10 PM
"This transaction reduced the outstanding debt by almost $6 million dollars, while also lowering the average interest rate from 4.18% to 1.69%"
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