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FPS Announces Successful Bond Sale and Refunding of 2011 Bonds

June 19, 2017

Fraser Public Schools Board of Education is excited to announce the successful sale of its 2017 School Building and Site Bonds as well as the sale of bonds to refinance bonds from 2011. The District sold the bonds on May 31 following the May 2 election.

“Fraser Public Schools is very pleased to report the results of this bond sale," said Superintendent Dr. David Richards. “We are grateful for the generous support of our community. The new bonds will ensure we are able to continue to provide the Fraser Difference to our students for years to come.”

Favorable timing of the sale and the District’s strong credit rating resulted in strong interest in the Fraser Public School bonds. The district only needed to sell $25.61 million in order to generate the voter-approved amount of $29.37 million, because investors were willing to pay a premium for Fraser Public Schools bonds. “We ran into a market that was hungry,” Craig Kahler from 5/3 Securities told the Board of Education at the June 12 meeting. “Pricing went extremely well. Investors are paying more than face value for the bonds.”

The district also refunded $7 million that was outstanding from the 2011 Series A bonds in order to lock in a lower interest rate. The refunding will save taxpayers more than $860,000 over the remaining life of the 2011 issue. This process is similar to a homeowner refinancing a mortgage.

S&P Global Ratings (S&P) applied their rating on the Michigan School Loan Qualification Program (“AA-“). Fraser’s bonds are qualified for the program and benefit by receiving the additional rating and security of the State program. Additionally, S&P rated the District “A” (with a positive outlook), noting good income levels, strong market value per capita, maintenance of strong reserves, a stable employment and business base, and improving real estate market. The bonds were sold at a true interest cost of 3.615% versus an initially projected 4.50%.

Dr. Richards stated, “Fraser was fortunate to find a receptive bond market on the day of pricing. Municipal bond market volume has been very low this year, particularly in Michigan. Investors were eager to invest in Fraser, a strong indication that the Board and Administration are responsibly managing the District’s finances. We are pleased that the sale will result in taxpayers paying considerably lower interest expense than originally projected. The sale starts our bond projects on the right footing.”