The Town of East Hampton announced last week that it had sold slightly more than $4 million in general obligation bonds and another $12 million in bond anticipation notes.
The proceeds will be used for various projects and acquisition of assets. East Hampton was able to secure very low interest rates on the borrowings primarily due to the credit-rating increase it received on August 11 from Moody’s Investors Service. The rating increase to Aa2, the third-highest level assigned by Moody’s for municipalities, from Aa3 accounted for about a 15- to 20-basis point savings in the low, 2.15 percent interest rate received on the bonds and a savings of at least 75 basis points on the extremely low rate of 0.19 percent for the short-term notes.
The town’s financial advisor, Richard Tortora of Capital Markets Investors, and Town Budget Officer Len Bernard estimated the savings in interest charges to the town for the notes to be about $140,000 for 2015 and several hundreds of thousands of dollars for the bonds over the repayment period of 13 years.
The proceeds from the sale will be used for long-term financing of various capital projects and purchases made over the last several years and for temporary financing for projects and acquisitions still in process. The short-term notes will be converted to long-term debt as appropriate next year.
“The market interest in the town’s debt is a compliment to the financial recovery the town has engineered over the last several years and the confidence of the financial markets in its new leadership,” said Mr. Bernard.