Laserfiche WebLink
<br /> <br /> <br /> <br />Presale Report <br />City of Mounds View, Minnesota <br />March 13, 2017 <br />Page 2 <br /> <br />Rating: The City’s most recent bond issues were rated AA3 by Moody’s. The City will <br />request a new rating for the Bonds from Standard and Poor’s. <br />If the winning bidder on the Bonds elects to purchase bond insurance, the rating <br />for the issue may be higher than the City’s bond rating in the event that the bond <br />rating of the insurer is higher than that of the City. <br />Basis for Recommendation: Based on our knowledge of the City’s situation, the objectives communicated <br />to us, our advisory relationship as well as characteristics of various municipal <br />financing options, we are recommending the issuance of general obligation <br />bonds as a suitable financing option because this is a cost-effective option <br />among the limited other options available to finance these types of projects that <br />still maintains future flexibility for the repayment of debt. In addition, it <br />conforms to the city’s policy and past practices to finance this type of project <br />with bonds provide the lowest possible interest cost. <br />Method of Sale/Placement: In order to obtain the lowest interest cost to the City, we will competitively bid <br />the purchase of the Bonds from local and national underwriters/banks. <br />We have included an allowance for discount bidding equal to 1.00% of the <br />principal amount of the issue. The discount is treated as an interest item and <br />provides the underwriter with all or a portion of their compensation in the <br />transaction. <br />If the Bonds are purchased at a price greater than the minimum bid amount <br />(maximum discount), the unused allowance may be used to lower your <br />borrowing amount. <br />Premium Bids: Under current market conditions, most investors in municipal <br />bonds prefer “premium” pricing structures. A premium is achieved when the <br />coupon for any maturity (the interest rate paid by the issuer) exceeds the yield <br />to the investor, resulting in a price paid that is greater than the face value of the <br />bonds. The sum of the amounts paid in excess of face value is considered <br />“reoffering premium.” <br />For this issue of Bonds we have been directed to use the premium to reduce the <br />size of the issue. The adjustments may slightly change the true interest cost of <br />the original bid, either up or down. <br />You have the choice to limit the amount of premium in the bid <br />specifications. This may result in fewer bids, but it may also eliminate large <br />adjustments on the day of sale and other uncertainties. <br />Review of Existing Debt: We have reviewed all outstanding indebtedness for the City and find that there <br />are no refunding opportunities at this time. <br />We will continue to monitor the market and the call dates for the City’s <br />outstanding debt and will alert you to any future refunding opportunities.