Bond Sale and Proceeds
Before the election, District 6 began working with a bond advisor, David Bell from Stifel. The information Stifel provided was crucial to a successful election, and helped the District determine how much to ask for in the bond election, and what that amount would ultimately mean for property owners in District 6.
Upon the successful election outcome, the District 6 finance team and the Stifel team began working in earnest to fast track the bond sale.
One of the most important documents in preparing for the bond sale is the offering statement. This is a document used by Stifel to provide potential investors information about the district and the projects the bonds will fund. Many people, including lawyers, accountants and financial professionals reviewed this document through multiple iterations. In addition to the Offering Statement (OS), the district had to go through a credit rating process. The district obtained credit ratings from both Standard & Poors (S&P) and Moody's. The district’s credit rating is strong, and the areas that downgrade the district’s ratings are out of the district’s control. Each credit rating entity has its own rating scale. The district scored at the low end of the “High Grade” ratings with an Aa3 rating from Moody’s and an AA- from S&P.
Once the credit rating and offering statement were complete, Stifel went to work marketing the District 6 bonds. They work with large investors from all over the country to garner interest in the bonds. Stifel strategically worked with other firms to ensure the District 6 bond issue would be on the market on a day with little competition. On Wednesday, January 22, the District 6 bonds were available on the bond market for investors to purchase. The bonds sold in less than two hours.
The sale ended with far more interest in the District 6 bonds than what were available to sell. With the market in an incredibly good place for the bond sale, District 6 was able to generate additional revenue, called a bond premium.
A bond premium occurs when the investor is willing to pay more than the maturity value of the bond in exchange for securing a long-term fixed interest rate. Since a bond premium is not guaranteed and can fluctuate with market conditions, District 6 did not build any bond premium into the budget for its bond projects.
This is all good news! District 6 will be able to use these additional funds to complete more projects and to provide for a healthy contingency fund, and at NO ADDITIONAL COST TO TAXPAYERS. So, essentially our voters are getting more bang for their buck!
The amount of bonds District 6 sold was $250 million. The sale generated a premium of about $64 million. After the costs to issue the bonds are taken out, District 6 has a little more than $63 million in additional revenue.
The Bond Oversight Committee will be consulted on what to do with these premium dollars, and make recommendations to the Board of Education. Ultimately, some of the money will be kept in a contingency fund to cover any additional expenses that arise from the projects planned in this bond issue. And, there will probably be enough money to complete additional projects.