Investors scooping up bonds
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The re-financing of Washington County’s 10-year-old debt might not be a topic that would rate more than a ho-hum in most circles, but the praise surrounding it was music to the ears of members of the board of commissioners and other stewards of the public treasury.
“I feel like we all should be doing high fives. It’s great news,” said Commission Vice Chairman Diana Irey Vaughan.
The latest bond issue was the first to be marketed without bond insurance, a feature not deemed necessary because the county’s rating was increased to Aa2, or high grade.
Nick Falgione, managing director of PNC Capital Markets LLC of Pittsburgh, noted at Thursday’s commissioner meeting that the rating is “two notches below a triple A rating, the highest rating. It’s one of the highest bond ratings in Pennsylvania.”
The Series 2003 and 2003A bonds were refunding of a 1993 issue and the advance refunding of a 1998 issue. To refund debt, savings needs to reach a level of at least 3 percent, but in this case, Washington County is saving 9 1/2 percent.
Falgione pegged the county’s savings in interest payments at $117,000 this year and $320,000 each year for next two years.
Jay Wenger, managing director of the Susquehanna Group Advisors Inc. of Harrisburg said when the county floated the bond issue in 2003, the average interest rate was 3.9 percent. The new range averages 2.61 percent.
“It’s a market where it’s very difficult to find buyers for bonds,” Wenger told the commissioners. “It’s been a very difficult market over the past several weeks.”
Interest earned on municipal bonds, such as those sold by Washington County, has the advantage for the bond holder of being tax-free.
The commissioners unanimously passed an ordinance related to the general-obligation bonds and set a closing date of Oct. 3.
In a bond issue last year, Washington County’s borrowing included $1.4 million last year for software to be used whether or not the county was going to conduct a countywide property reassessment. The commissioners entered into a $6.96 million contract last month with Tyler Technologies. The county does not have to pay the money up front, but according to a schedule as the assessment progresses. Tyler is required to complete the project in 2017.