One immediate outcome was evident at Monday’s Select Board meeting when the board approved a 15-year bond sale of almost $2.6 million at a net rate of just over 1 percent.
The interest rate is “historically low,” said Abby Jeffers of Hilltop Securities, the town’s financial advisor. “It was really tight bidding. You did as well as anybody on the day of the sale. It was one of the lowest true interest costs we have seen corresponding to market conditions right now.”
S&P describes credit ratings on its website as “forward-looking opinions about an issuer’s relative creditworthiness. They provide a common and transparent global language for investors to form a view on and compare the relative likelihood of whether an issuer may repay its debts on time and in full.”
Town Manager Sarah Stanton pointed out that “Maintaining a strong credit rating is of utmost importance in terms of the overall financial health of the town, as well as our ability to borrow at the lowest interest rates possible. This reaffirmation is welcome news and another endorsement of the best financial practices that the town has long employed.”
According to S&P Global’s written report to Bedford, the AAA rating was based on several factors: “Very strong economy, very strong financial management, strong budgetary performance, very strong budgetary flexibility, very strong liquidity,” as well as debt management and a formula on environmental, governance, and social variables.
“Bedford’s continued maintenance of very strong budgetary flexibility, with available reserves averaging about 20 percent during the past three fiscal years, due to positive financial performance and very strong financial management further supports the rating,” the report said.
“Although the full effect of Covid-19 on Bedford remains unknown, the stable outlook is supported by the town’s very strong reserves; conservative budgeting; and very strong financial-management conditions, which should provide a cushion to absorb unexpected revenue decreases or unexpected stagnation in its economy due to economic recovery. “
The outlook, according to the report, is generally for two years.
Christopher Schweitzer, the town’s treasurer and collector, told the Select Board that there were five bids for the $2,595,000 in general obligation bonds. Fidelity Capital Markets of Boston was selected. The gross cost to the town at maturity will be $3,020,078.95
The capital projects bonded were various infrastructure items covered under article 23 of the 2020 annual town meeting: sewer pump station replacements, public safety software, water main and water quality improvements, and a new dump truck.
Fidelity paid the town a premium of $436,974 to help secure the bid, and under the law that money has to be used to offset the principal.