District Administration - April 2007 - (Page 49)
best rating, for example, held by just a handful of districts nationwide, is AAA. Then comes AA, A, BBB, BB, and so on, with each possibly amended with a plus or minus. Moody’s highest rank is Aaa, then Aa, A, Baa, Ba, B, and so on, with its letters possibly amended with a 1, 2 or 3. Regardless of the type of letters, the idea is the same underneath: Each fi rm does research on the economic strength of the district, including a review by a rating committee, and provides its best guess as to how creditworthy the district is. When it comes time to sell a bond, lenders are willing to get a lower rate of return for a more desirable loan. The rate your district gets for its bonds is connected not www.DistrictAdministration.com only to your rating but how much you want to borrow, for how long, the interest rate environment and other factors. Whether your school district has just passed a new bond referendum example helps show why the rating matters. Let’s say your district wants to sell $50 million worth of bonds amortized over 20 years. If the district has an A rating—a solid investment grade—perhaps you can Pay down existing debt. “Make sure there are no surprises—no unfunded liabilities that will come due during the life of the bond.” —Don Smith, building fund director, Academy School District 20, Colorado Springs, Colo. or is considering refi nancing a current bond, there is no hardand-fast rule about how much you can save by improving your bond rating. But a quick hypothetical borrow at 5 percent, and the debt service would be $4 million a year. If you can get your rating up to AA, you probably would be able to save at least 15 basis points (100 basis April 2007 49
http://www.DistrictAdministration.com
Table of Contents for the Digital Edition of District Administration - April 2007
Editor's Letter
Update
Inside the Law
Curriculum Update
District Profile
Administrator Profile
“See You in Court!"
Lost in Translation
Bonding Agents
Certifying AP Courses
Hunting for Talent - Part 2
Buying Power
The Musty Bookshelf
New Products
Leadership
Speaking Out
The Online Edge
Problem/Solution
Calendar of Events
Overheard On The Pulse
District Administration - April 2007
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