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First $20M of Newhall School District bonds sell in 30 minutes Monday

Posted: August 28, 2012 1:30 a.m.
Updated: August 28, 2012 1:30 a.m.

Signaling positive news for Newhall School District taxpayers, officials sold their first $20 million in bonds in about 30 minutes Monday — at a better rate than they planned.

“As soon as we were on the market, they all pounced on our offering,” said Newhall Superintendent Marc Winger. “It just so happened that it was a slow week, there wasn’t much out like us, there wasn’t much out there with the rating we have.”

Newhall district voters approved a $60 million bond measure in November 2011, which is intended to pay for upgrades to schools’ equipment and facilities.

The first $20 million in bonds were snapped up quickly Monday due to a number of factors, said Tony Hsieh of Keygent Financial, which handled consultation for the school.

“It was a good day in the market,” Hsieh said. “We caught a good week, actually. There’s not a lot of supply, so this was a good week to sell.”

The district’s recent AA- rating by Standard & Poor is what made the bonds particularly attractive to investors, he explained.

“The credit rating is what would set the Newhall (School) District apart from most investors,” Hsieh said. “So, if you saw something like (Newhall’s rating), you’d say. ‘Oh, OK, I’m going to pay attention that.’”

The difference in bond rating also can mean the difference in hundreds of thousands of dollars for taxpayers over the term of the bond, he said.

“If you go even one notch lower, say an A+ (rating), at 2.25 percent — that doesn’t seem like a lot, but on a $20 million transaction it adds up to several hundred thousand dollars (in interest),” Hsieh said.

Because of market conditions and sound fiscal management, the district not only sold all of its bonds within about a half-hour, it also sold them at a more aggressive interest rate, Winger said.

The bonds were initially put on the market at 2 percent, but the district was actually able to sell them at 1.95 percent, which translates into tens of thousands of dollars worth of savings, Hsieh said.

“The stable outlook reflects our view of the school district’s strong operating reserves and the budgetary flexibility they provide and takes into consideration the possibility of further draws on reserves in coming years,” according to a Standard & Poors report on the district’s finances.


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