Municipal bond sale is a success

Sale proceeds will pay for about 50 construction projects

“We had some concern that our bond sale might have been affected by the state’s budget crisis. But we were able to show the credit rating agencies that even though our state aid has been cut over the years, we are able to manage our budget so that we end up with surplus each year.”

James Jaskot, Cheshire’s director of finance

CHESHIRE — Town officials have successfully completed a $14.6 million bond sale.

The proceeds from Wednesday’s bond sale will be used to pay for about 50 different capital projects around town, said James Jaskot, Cheshire’s director of finance said Friday. The money from the bond will be available to town officials after March 6, which is the settlement date for the sale.

“A lot of it is for infrastructure and building improvements,” Jaskot said.

A total of 12 bids were made for the municipal bonds, with BNY Mellon submitting the winning bid. The interest rates bid on the bonds ranged from a winning bid of 2.71 percent to a high bid of 2.91 percent, he said.

A lower interest rate benefits Cheshire, Jaskot said, because it means the town has to pay the bond holders less money.

“They are willing to pay a lower interest rate because they feel more secure that with our high rating, there’s less chance that they won’t get paid,” Jaskot said. “We had some concern that our bond sale might have been affected by the state’s budget crisis. But we were able to show the credit rating agencies that even though our state aid has been cut over the years, we are able to manage our budget so that we end up with surplus each year.”

The town has an AAA bond rating from both S&P Global and Fitch Ratings, two of Wall Street’s three major credit rating firms, he said. AAA is the highest rating possible and both S&P and Fitch reaffirmed their ratings before the bond sale.

Matthew Spoerndle, senior managing director of Phoenix Advisors and Cheshire’s municipal advisor, said in addition to the town’s healthy credit rating, the success of the bond sale was also the result of “prudent long term financial management.”

“Many issuers would be happy with three or four bids,” Spoerndle said in a statement. “Getting twelve is about as good as it gets.”

Town Council Chairman Rob Oris said the results of the bond sale “shows there is a lot of confidence in the town’s credit worthiness.”

Jaskot said that evidence of the town’s financial management capability came following completion in 2015 of a $32.15 million upgrade of the town’s Wastewater Treatment plant. There had been concerns about the amount that the town makes in debt service payment each year would spike as result of the cost of the wastewater treatment project, he said.

“But we planned well in advance for that debt burden, so we have been able to handle it,” Jaskot said.

Last year, with an eye toward further improving the town’s financial management, Jaskot said the council made changes to its policies regarding financial reserves.

Prior to the change, the town’s financial policy was to have a fund balance level of between 8-to-9 percent of the actual expenditures for the prior fiscal year, he said. The policy now requires a fund balance of 9.25 percent of actual expenditures for the prior fiscal year.

“We’ve added a little more cushion there,” Jaskot said.