NEW PROVIDENCE, NJ – A combination of sterling credit ratings from three investor services and spirited on-line competitive bidding for a $9.98 million municipal bond resulted in a savings of $116,000, Borough Administrator Doug Marvin said.
Last week, borough officials gathered at the Municipal Center to participate in an online auction where five pre-qualified bidders sought the opportunity to enter the lowest interest rate affording the winner with the opportunity to market the attractive bond.
During the bidding session, which took only 18 minutes, the five investment firms made a total of 16 bids.
Marvin said that during the process the firms were not provided with the actual bid data of their competitors.
However, through a ranking system, the bidders knew where they stood in relation to their competitors.
“If you were ranked third, you knew you were going to have to enter a lower bid to move up,” Marvin said.
In the end, the winning interest rate bid was 2.25 percent made by Roosevelt and Cross. The difference between the highest and lowest bids was $116,000.
Proceeds from the general obligation bond sale will be used to refund the borough’s outstanding anticipation notes of $3.25 million and finance various capital improvement projects.
The other part of the combination punch is the borough’s sterling credit rating. Recently the borough was assigned the highest rating (AAA) from Fitch Ratings and Standard and Poor’s. Moody’s up-graded the borough’s credit rating to their second highest classification of AA1.
“We are extremely proud of this accomplishment. There is a lot of hard work that went into this,” Mayor Al Morgan said as he praised borough officials, especially CFO Kenneth DeRoberts.
In their credit reports, all three agencies were effusive in their praise of the borough’s financial practices.
Standard and Poor’s cited very strong management with strong financial policies, strong budgetary flexibility and liquidity, and a strong debt and contingent liability position.
Moody’s cited borough strengths as a large tax base, strong wealth levels and strong management practices.
In its report, Fitch Ratings cited the borough’s strong financial management and prudent budgeting practices that have led to the maintenance of ample reserve levels providing a high degree of financial flexibility.
Fitch Ratings also cited strong socioeconomic indications with wealth levels above average, representative of the highly educated professionals residing in the borough and its location within commuting distance of major employment centers.