Board Agenda - March 04, 2008
IX. Consider Matters Related to Issuance/Sale of PISD Unlimited Tax Refunding Bonds, Series 2008
Presenter: Richard Matkin
Purpose: A - Request decision - closure required
Time: 5 minutes
Description:
The bond market is currently experiencing thirty year historically low interest rates. Our financial advisor, David Medanich, with First Southwest Company, has brought forth the recommendation to convert the Variable Rate Unlimited Tax School Building Bonds, Series 1997 to a fixed rate not to exceed 3.5%. The bond order for the Variable Rate Bonds, Series 1997 requires the District to levy taxes at 6%. By converting the bonds to a fixed rate, we are able to expand our capacity to issue new debt, impact the Debt Service tax rate in a positive manner and eliminate the need for a Standby Bond Purchase Agreement.
The District's current rating from Moody's is Aa1. The District has a strong underlying AA rating with a stable outlook from Standard & Poor's. The Variable Rate Unlimited Tax School Building Bonds, Series 1997 has the Permanent School Fund Guarantee which provide a AAA rating, as such, this refunding issue of the 1997 Variable Rate Bonds will receive the Permanent School Fund Guarantee as well since the refunding will reduce the interest rate on these bonds from 6% to a rate not to exceed 3.5%.
The refunding bonds will be for the same time period and payment schedule as the originally issued Variable Rate Bonds, Series 1997. The District's bond counsel is drafting the bond order to be provided under separate cover.
Recommendation:
The administration recommends the adoption of the order authoring the issuance of Unlimited Tax Refunding School Building bonds, Series 2008.
Business Impact:
Reduced Debt Service cost to be determined.
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