Montgomery County successfully auctioned $55 million in bonds this week, garnering interest from ten banks and investment firms before agreeing to sell the bonds to PNC Capital Markets at an interest rate of 2.39 percent.
Uri Monson, the county's chief financial officer, said the county did "very well" in the bond issuance, with interest costs that he said compare favorably with other recent municipal bonds sold in the region.
A much larger, $950 million bond issuance by the Commonwealth of Pennsylvania hit the market at the same time as the county's bonds and obtained an interest rate of about 2.9 percent. Monson said that Moody's Investors Service rated the state's debt at Aa2, a notch below Montgomery County's Aa1 rating.
A $65 million bond issuance by Bucks County, which has a top rating of Aaa from Moody's, obtained an interest rate of about 2.38 percent a few weeks ago, Monson said.
Montgomery County itself enjoyed a Aaa rating from Moody's until last summer, when the ratings agency downgraded its credit, citing depleted fund reserves after "several years of sizable operating deficits."
The money will be used to fund a series of capital and infrastructure projects approved by the county's Board of Commissioners last month.
The commissioners had authorized Monson to borrow up to $65 million, but Monson said anticipated revenue from the eventual sale of the county's Human Services Center complex in Norristown, which has attracted multiple bidders, enabled the county to reduce the size of the bond issuance.
Board of Commissioners Chairman Josh Shapiro praised Monson and the county's other financial staffers for using a "transparent and competitive process" to obtain an interest rate that "almost mirrors a triple-A (Aaa) issuance."
"The fact that we had ten submissions [of bids] on this seems phenomenal to me," Commissioner Leslie Richards said, citing her previous experience with municipal borrowings that she said were "fortunate" to get five bids.
Monson explained that the county was "very aggressive" in getting word out about the county's bond issuance.
The sale took place just before noon on Wednesday, which was the deadline for interested parties to submit bids. All ten bids arrived in the minutes just before the deadline as county financial officials watched computer screens and waited to see who would offer the best terms, Monson said.
The money is expected to arrive in the county's coffers on May 3, Monson said.