Bond Accountability Commission 2 Recommendations Page 105
While Bonds are long-term borrowings, Notes are typically no more than one year. Bond issues lock in long-term interest rates, thus facilitating long-term financial planning while minimizing risks of future market fluctuations. With short maturities, Notes carry lower borrowing rates.120 Issuing Notes gives the District flexibility to reduce or increase the pace of long-term borrowings in response to current conditions. Notes can be refinanced in a cost-effective manner should the need arise. The following chart shows the Issue 14 Bonds and Notes issuance schedule. As mentioned, $35,000,000 in Notes was issued in 2001 and refinanced along with the 1992 Library Bonds via the 2002 Bond issue that also included $40,000,000 in new money for Issue 14 projects. Further $125,000,000 in new money Bonds was issued in 2004. Notes in the amount of $30,000,000 were issued in both 2005 and 2007, with $15,000,000 of the latter being refinanced in conjunction with an additional $5,000,000 in new money Notes in late 2007. Lastly, Notes in the amount of $15,000,000 were issued in 2008. The 2005 Notes matured on July 27, 2006; $15,000,000 of the 2007 Notes matured on December 6, 2007; the 2007A Notes matured on July 30, 2008; and the 2008 Notes matured on September 30, 2009. These maturing notes were repaid with property tax revenue.
See Seymour, “Despite Success of BABs, Muni Curve Stays Steep” (Bond Buyer Online Jan. 13, 2010) (“At the beginning of 2009, 30-year triple-A municipals yielded 315 basis points more than two-year triple-A munis, based on the Municipal Market Data scale. A year and $64.1 billion of BABs issuance later, the 30-year-over-two-year curve had steepened 40 basis points.”) A basis point is 1/100 th of a percentage point.
Published on May 14, 2014