A rising municipal bond market did not stand in the way of the City of Lambertville in its recent bond sale.
The city rolled several existing Bond Anticipation Notes (BAN) from previous years, as well as some newly acquired debt, into a bond sale in last March to reduce the overall debt principal and interest payments in the coming years, according to official.
The winning bidder for $8.15 million general obligation bond was Roosevelt and Cross Inc. and Associates, a New York City-based underwriting firm.
The city will pay a 3.18% interest rate bid.
The sale received five total bids, all within approximately two tenths of a percentage point behind the winner. Other New Jersey sales that week included a 20-year, $4.8 million Seaside Park Borough bond sale that came in at a 3.52% interest rate, according to officials.
The debt has funded several needs for the city. Some are new vehicles and equipment for the City of Lambertville Police Department, building upgrades, buying the Closson property, road construction and infrastructure, among other government expenditures, according to Mayor Andrew Nowick.
As bond ratings increased this year, it gave the city a better opportunity to sell the bond. The city’s approach to stabilizing the municipal finances in the last two years has put city in a much stronger financial position, per Nowick.
The sale follows recent revisions in rating outlook from both Standard & Poor’s Global Ratings (S&P) and Moody’s Investors Service. Previously, both rating agencies had a negative outlook on the city’s credit rating. However in the last six months, both firms have removed the negative outlook and affirmed the stronger rating for the city.
Lambertville’s “ongoing development and increased tourist activity” was highlighted for bolstering the local economy by S&P.
The city sold their bonds with a “AA” rating. The rating affirmations and removal of the negative outlooks saved the city an estimated $50,000 to $75,000 in interest cost, according to officials.
A strong and stable economy and improved budgetary management and oversight were cited as positive factors in the rating.
The new bond issue will be amortized over 15 years.
The bond issued by the City of Lambertville was considered bank qualified, which made it attractive investments.
“In spite of the notable volatility in the bond market, the bond market allowed for a strong performance by the city,” said Sherry Tracey, senior managing director of Phoenix Advisors, the city’s independent municipal advisor.
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