San Jose Unified sells general obligation refunding bonds with $14,005,000 savings going to District property owners
SJUSD receives strong credit ratings of “Aa2” and “AA”
SAN JOSE- The San Jose Unified School District successfully sold its 2011 General Obligation Refunding Bonds on Thursday, August 18, 2011 in the total principal amount of $62,330,000. The tax-exempt bonds refinanced the District’s outstanding Election of 2002, Series A Bonds and 2001 Refunding Bonds Stone & Youngberg served as the underwriter for the District’s bonds.
The District sold its bonds on a day when the ten-year U.S. Treasury rate reached its lowest level in 60 years at 1.99%. The bonds were well received by the market with the District's strong credit ratings of "Aa2" and "AA" by Moody's and Standard & Poor's, respectively, and the District’s nationally recognized name and location. In order to drive down interest rates even lower and take advantage of strong investor demand for bonds maturing within the first ten years, the bonds were amortized with principal payments on a semi-annual basis. This unique structure has been utilized by only a handful of California school districts within the last couple of years.
The combination of the low interest rate environment and strong credit ratings of the District, allowed the District to achieve total savings of $14,005,000. The all-in interest cost of the refinancing was 3.17%. All of the savings achieved will flow directly to property owners of the District through the levy of lower property taxes.
“The District’s success in achieving such a strongly favorable outcome was a result of its strong credit ratings, well-recognized name, and a continuing low interest rate environment”, said Bruce Kerns, Managing Director with Stone & Youngberg.