On Thursday, March 1, 2012, the Cherry Creek School District successfully sold $48,855,000 of District General Obligation refunding bonds for savings of $4 million.
The bonds were sold competitively with bids received electronically via the internet. The winning bid was submitted by Piper Jaffray with a True Interest Cost of 1.6%. The cover, or second best bid, was submitted by Morgan Keegan & Co. Inc.
There were ten additional bidders including: Stifel Nicolaus & Company, Inc.; Hutchinson, Shockey, Erley & Co.; RBC Capital Markets; Wells Fargo Bank; Robert W. Baird & Co.; Morgan Stanley; US Bancorp; Guggenheim Securities; Bank of America Merrill Lynch; and J.P. Morgan Securities.
The issue refinances $49,485,000 of Series 2004 bonds which were outstanding and which carried an interest rate of 4.4%. The bond issue was structured as tax exempt bonds maturing over the period of 2014-2022.
“This transaction reduced the outstanding debt by over $500,000, while also lowering the average interest rate from 4.4% to 1.6%,” Guy Bellville, Cherry Creek School District Chief Financial Officer said. “The savings are passed directly to the taxpayers of the district through reduced tax collections totaling over $4 million spread over these next 10 years.”
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 are a reflection of the district’s quality, as perceived in the credit markets. The district’s recent upgrade by Moody’s from Aa2 to Aa1 was also very beneficial and helped to attract strong investor interest.