A favorable climate for bonds coupled with a long-standing AAA rating netted Ramsey County a $6.2 million savings after refinancing two bond packages this week.
Terri Heaton, a Baker Tilly financial advisor to the county, said the successful refinancing was due in part to COVID-19, which has created an opportunity for investors to choose security over high risk.
“You’re in a market where folks are looking for secure safe bonds because of COVID…to park the money. So if you find a county GO (general obligation) bond issue with two triple A’s, it’s very enticing,” Heaton said.
Earlier this week, the board approved the sale of General Obligation Capital Improvement Plan Refunding bonds in the amount of $19.5 million and Taxable General Obligation Refunding bonds in the amount of $28 million.
The bonds work by raising money through investors to pay operating costs and fund county-wide projects. Bond investors are essentially lending money to a municipality in return for the interest income they make on the bonds. General Obligation bonds are unsecured by any assets, instead relying on the full faith and credit of the issuing municipality. The county has the authority to tax its residents to pay the bondholders.
Heaton told the board Tuesday taht they had expected to save $5.3 million in the process, but actual savings was $6.2 million.
“Wow. Wow. That is amazing news,” Ramsey County Commissioner Mary Jo McGuire said after hearing the report. “I am so proud of our county.”
Heaton said the fact that the county has maintained a AAA bond rating, a rating that indicates the county is in excellent financial health, helped lure investors.
“That is as strong as you can get on a credit rating report right now,” Heaton said. “What came through in the credit rating is the long term planning. I think that’s what the agencies are really focusing on is the foundation that you’ve built.”
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