Saturday, November 21, 2009

Rating Good, Debt Level High Analysts Say Of Mt. Lebanon School District

A bond rating analyst praised the financial strength of the Mt. Lebanon School District, but warned about its high level of debt.

Standard & Poors, an off-Wall Street firm, gave the school district's $69 million bond issue a rating of "AA," or stable, based on its very strong wealth and income levels, strong local economy within the Pittsburgh area and strong financial position.

"It's always good to have an outside agency verify that you're in a strong financial position," said Jan Klein, director of business for the school district.

Link: www.pittsburghlive.com/x/pittsburghtrib/s_653852.html

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3 Comments:

Blogger Bill Matthews said...

Not mentioned is that while the District issued $69MM in bonds, they were Premium Bonds with mostly 5% coupons. This structure generated another ~$6MM in bond "premium" for the project (total $75MM cash in hand from the issue).

Two ways to look at this:
We borrowed $69MM at about 5% and pocketed an extra $6MM in bond premium
- or -
We borrowed $75MM at just under 3.6%.

It is disingenuous for anyone to imply we borrowed $69MM at just under 3.6%.

November 22, 2009 11:32 PM  
Anonymous David Huston said...

Keep up the good work, Bill.
We are fortunate to have you in our community.

November 23, 2009 8:52 AM  
Blogger James Fraasch said...

Bill,

Agreed. I think scenario one is the more correct technical way to look at it since that $6 million premium did not count against the District's debt limit.

In order to not borrow that $6 million, the bond payments (or coupons) were jacked up to 5%. Indeed, the District still has to pay for the premium.

James

November 23, 2009 11:02 AM  

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