The Redwood County Board of Commissioners got a mixed bag of information during its meeting this past Tuesday, as it met with Terri Heaton of Springsted.
Springsted conducted the bidding process for the county, as it sells the general obligation bonds for the law enforcement center and recycling center projects.
The bad news is the bids came in higher than anticipated, as the market began experiencing an upward trend in interest rates.
The good news is that it could have been worse.
According to Heaton, the county’s Moody’s credit rating went from Aa3 to Aa2, which she added, was a surprise.
“Everyone else seems to be moving in the other direction or staying stable,” she said, adding she expected things to remain the same at best for the county.
The reason for the credit rating change was due to several factors, said Heaton, including the fact that the county’s ag property tax base is strong because land prices continue to rise.
She also said good cash reserves coupled with strong financial management create the kind of environment for a positive credit rating.
Despite the market being volatile and interest rates on the rise, including a recent interest rate spike, the county did issue at the right time, as the spikes softened a bit.
“If you would have done this two weeks ago, the rate would have been 30 basis points higher,” said Heaton.
The bond, which is for 15 years, is for $5,415,000, and the overall interest rate is 2.5958 percent.
The low bid came from Robert W. Baird and Company, Inc. and its syndicates.
There were a total of five bids with the highest bid having an interest rate of 2.7248 percent. Heaton said it is very common to have such a small margin between the highest and lowest bid.
The county board approved the low bid, with the payments beginning in 2014.
Heaton put the bids in perspective, as she said when the county was discussion a project for the law enforcement center back in 2005 the interest rate would have been closer to 4.6 percent.
“Everything is relative,” she said.
Heaton said the county is going to be in good shape, as the trend seems to show interest rates are going to continue to increase as the market continues to strengthen.
“In terms of the bonds you are in good shape,” she said.