Sale of Bonds

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April 2018

One of the crucial, yet somewhat behind-the-scenes aspects of our new buildings has recently occurred: the sale of our bonds on the open market. While the actual sale occurred April 11 & 12, it is the culmination of several months of work by about 35 folks.

In early March, Southwest Local Schools Treasurer Brian Rabe and I met with representatives of Moody’s Investors Service regarding the district’s bond rating. Brian and I, along with our debt counsel representatives from Bradley Payne Advisors and an underwriter from Key Bank, shared details as to why our school district is a strong investment.

The presentation covered at length our levy campaign, community engagement initiatives, enrollment growth projections, our school report card performance and an in-depth look at the district’s financials. The Moody’s review panel asked detailed questions for over an hour.

Our goal was to stay at the current bond rating of Aa1. We knew it would be almost impossible to improve the rating due to the amount of debt we are taking on with our new school construction. However, we didn’t want to lose ground – for the very same reason.

This was an amazing experience – being in a room with experts who are calculating credit ratings and the thought process that helps them make such analysis.

In late March, we were informed that Moody’s assigned an “A1 underlying rating” to Southwest Local School District for the $60.8 million School Improvement Unlimited Tax General Obligation Bonds, Series 2018A. The $1.0 million School Improvement Unlimited Tax General Obligation Bonds, Series 2018B also received the A1 rating. In addition, the bond credit rating company assigned a “Aa2 enhanced rating to the Series 2018A bonds.”

In layman’s terms, the bond experts at Moody’s (considered one of the “Big Three” credit rating agencies along with Standard & Poor’s and Fitch Group) consider our bond funds to be of “upper-medium credit quality.”

Their report cited district strengths as “healthy reserves and liquidity” and “multi-year trend of tax base growth,” noting that the modestly-sized tax base continues to benefit from residential developments. The district was commended on our financial operations and our healthy liquidity; also of note was that our tax base is “modest but growing, with a solid demographic profile.”

The report was made available to any financial institution or even individual interested in possibly purchasing the bonds.

As we watched the sale of our bonds on the open market April 11, I realized that we are again one step closer to making the four new schools a reality for our students and our community. I’m proud that our financial resources and operations were rated highly by Moody’s and that the effort we exert into being good stewards of taxpayer dollars is recognized by financial experts.

When it was all said and done, our bonds were sold quickly, under an aggressive strategy set forth by our team.

Now that such background aspects as selecting the architecture and selling of the bonds are finished, we turn our focus to the next steps: construction company selection and community discussion regarding design. This is when we need massive input from the community on the look and functionality of the schools. Meeting times and locations will soon be shared; all are welcome and encouraged to attend and to be part of these important decisions.

- John C. Hamstra, Superintendent, Southwest Local