Financing the Guilford High School Project

The town has secured the short-term borrowing for the construction of the new Guilford High School project, which has a price tag of $92 million, with the sale this month of $15 million in short-term bond anticipation notes.

The notes were purchased by TD Securities at an effective interest rate of 0.12 percent and will mature in August 2014, at which time general obligation long-term bonds will be issued to permanently finance the notes, as well as provide additional funding for the project.

First Selectman Joe Mazza said, "The rate of 0.12 percent we received on these bonds is a very good rate, which gave us a lower debt service than we anticipated. We are hoping that when we go for the long-term financing we are still in as good of a position and our interest rate is as low."

For long-term bonds for the project, there will be two different bonds issued, which will go out at different times. Mazza said the first round for the long-term financing will go out this August.

The town received five short-term bond anticipation note bids from national and regional investment banks. According to Guilford Finance Director Sheila Villano, Guilford has a Moody's bond rating of Aa2 and a Fitch Bond Rating of AA+.

According to the rating tier definitions, Guilford has a very strong capacity to meet its financial commitments. Mazza said that when the town goes out for the long-term bonds it will ask the credit rating agencies to review the town again in the hope of further raising the credit rating, which would help retain a lower interest rate on the bonds.

"Right now Guilford is in a great financial position," said Mazza.

Guilford was assisted in this transaction by Independent Bond & Investment Consultants of Madison as municipal advisor and Day Pitney, LLP, of Hartford as bond counsel.

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