TPS sells 2015 bonds, saves district $3 million

At the Monday Tecumseh School Board meeting, it was announced that bonds set to replace the Tecumseh Public Schools (TPS) 2005 Refunding Bonds (Series A) and to pay off the outstanding balance of the Michigan School Loan Revolving Fund (Series B) were sold in the capital markets on December 9, according to a press release from TPS. The Series A bonds were sold for $25.11 million and will close on February 5 while the Series B bonds sold for $9.79 million and will close on January 14.“We were able to secure over $3 million in savings for the taxpayers of Tecumseh,” said TPS Supt. Kelly Coffin. “This was accomplished by taking advantage of a low interest rate municipal bond market. By refunding the balance due to the Michigan School Loan Revolving Fund, we eliminated the risk associated with variable rate debt and locked in a rate that is less than one-half the rate we were paying.”Back in September, the board voted to refund the 2005 bonds.Then, Coffin said, “We are looking at a significant savings. It makes sense.” As part of the bond issuing process, Standard and Poor’s (S & P) Rating Services assigned the district an “A+” credit rating after reviewing the district’s financial condition. The quality of credit directly affects the marketability of the bonds. According to S & P’s report, it cited the district’s proximity to the Ann Arbor and Toledo economies, good income, and strong wealth indicators with moderate overall debt burden as strengths for the district. S & P also applied their rating on the Michigan School Loan Qualification Program, which it gave to the district an “AA-” rating. TPS’ bonds were qualified for the program and benefit by receiving the additional rating and security of the state’s program backing. The Series A bonds sold at a true interest cost of 2.88 percent, while Series B sold at 1.58 percent. “Tecumseh’s bonds were well received by investors when market volume was at the highest levels of 2014,” said Coffin. “We are pleased to secure such a low interest rate over the remaining life of the bond issue. The board of education wisely took action to make this sale possible and we are pleased to report this good news.” The bonds were priced against two other Michigan school districts — Hudsonville Public Schools and Fraser Public Schools. TPS and Hudsonville saw similar coupons and yields, with both modestly better than Fraser did, according to the press release.In other business, the board:• Accepted a $1,225 gift from TLC Community Credit Union earmarked for the Tecumseh High School sculpture garden.