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<br />  <br /> <br />Presale Report <br />City of St. Anthony, Minnesota <br />August 15, 2024 <br />Page 2 <br /> <br />Rating: <br />S&P Global Ratings "AA" <br />The City’s most recent bond issues were rated by S&P Global Ratings. The current rating on <br />those bonds is “AA”. The City will request a new rating for the Bonds. <br />If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue <br />may be higher than the City's bond rating in the event that the bond rating of the insurer is <br />higher than that of the City. <br />Basis for Recommendation: <br />Based on your objectives, financial situation and need, risk tolerance, liquidity needs, <br />experience with the issuance of Bonds and long-term financial capacity, as well as the tax <br />status considerations related to the Bonds and the structure, timing and other similar matters <br />related to the Bonds, we are recommending the issuance of Bonds as a suitable option <br />Method of Sale/Placement: <br />We are recommending the Bonds be issued as municipal securities and offered through a <br />competitive underwriting process. You will solicit competitive bids, which we will compile on <br />your behalf, for the purchase of the Bonds from underwriters and banks. <br />An allowance for discount bidding will be incorporated in the terms of the issue. The discount <br />is treated as an interest item and provides the underwriter with all or a portion of their <br />compensation in the transaction. <br />If the Bonds are purchased at a price greater than the minimum bid amount (maximum <br />discount), the unused allowance may be used to reduce your borrowing amount. <br /> <br />Premium Pricing: <br />In some cases, investors in municipal bonds prefer “premium” pricing structures. A premium <br />is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds <br />the yield 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 “reoffering <br />premium.” The amount of the premium varies, but it is not uncommon to see premiums for <br />new issues in the range of 2.00% to 10.00% of the face amount of the issue. This means that <br />an issuer with a $2,000,000 offering may receive bids that result in proceeds of $2,040,000 <br />to $2,200,000. <br />For this issue of Bonds we have been directed to use the net premium to reduce the size of <br />the issue for the project. The resulting adjustments may slightly change the true interest cost <br />of the issue, either up or down. <br />The amount of premium can be restricted in the bid specifications. Restrictions on premium <br />may result in fewer bids, but may also eliminate large adjustments on the day of sale and <br />unintended impacts with respect to debt service payment. Ehlers will identify appropriate <br />premium restrictions for the Bonds intended to achieve the City’s objectives for this financing. <br />25