HomeMy WebLinkAbout0490.000•
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september 6, 1990
HONORABLE CITY COUNCIL
Palo Alto, California
SALI OP tJ'ULUY REVE>!!1!!! 101lPS
Members of the Council:
PurpOse stat .. ent
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This is an informational report regarding the successful sale of
the $9,650,000 City of Palo Alto Utility Revenue Refunding Bonds
1990 Series A. No council action is required~
Bac)[aroul'14
Staff has ~en working since January 1990 on refunding the 1985
Utility ~evenue BoQds, Series A ~djustable Convertible Extendable
securities (ACES).. staft received Council approval to proceed with
the plan of locking in a low, long-tera interest rate l provided the
issue could be znarketed at an Bveraqe coupon rate not to exceed ".1
percent.
As reported in August (CMR.::45B:OJ. the City Manager. utilities
Director and Finance Dir.oector made presentations to Moody'S and
Standard and Poor's in New York on July 17~ 1990~ which resulted in
a rating upgrade to Aa by Moody's and AA~ by Standard and Poor's.
Pricing
Staff priced the new utility bonds on August 2~ 1990, the day
before Iraq invaded x~·ait. The tiaing was fortuitous, since the
marke.t IIlOved quickly away after the news from the Middle East
became known~ Staff vas able to sell the new bonds with interest
rates from S.l to 6.8 percent, with an average coupon of 6.6
percent and a net interest cost of 6.7 percent. Those same bonds~
if sold today, would: probably have an average coupon rate .so basis
points higher. Attacbed is a copy of the front of the final
official statement showing the interest rates tor each maturity,
and a .graph prepared by tl1e underwriters, Stone" Youngberq .. Which
CMR:490: D
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shows that the Auqust 2, 1990 pricing was, indeed., the best
possible day to price the securities. It is 'Worth notinq that
Stone' Younqberg malr.1ta.inecS t.heir colNlitment to purchase the bonds
despite the drastIc .arket cb.~nge. They 'Were una.ble to sell
approxi.ately $2 .iIlton of the later ~aturities and are still
retaining a significant amount of the bonds in their own portfolio,
ainee t.hey are not readily saleable in the current market.
The bonds were BOld with a final maturity of 2006. The sale was
advertised in both the County Almanac in Henlo Park and tbe
Peninsula Tizes Tribunp in Palo Alto, to allow local residents a
chance to purchase bonds.
m9.illCl
The bond sale closed on Auqust 21, 1990. The refunded 19S5 Utility
Revenue Bonds were elimInated on Sept.ember 3., 1990. The entire
process was completed on time at an extremely attractive rate.
Respectfully Submitted.
hA:.,-, $;r~f
GORDON B. FORD
Treasury Hanaqer
Att.achments.
Related StatL Reports:
CMR:490:0
04R:458 :0
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NEW ISSUE
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$9,650,000
CITY OF PAW ALTO
ll'I'D..lTV REVENUE REFUNDING BONDS
1990 SERIES A
(Santa Clara County, California)
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Dated: August I, 1990 Due lune I ... YO'" below
--~ -.... ~ Dw'--'I !!'!!!!!! .... ......
1991 •..•..• 370,DOO 5.70 100 1m •.•.•.• 595,000 '.45 100
1992 _ .••.•• 390,000 5.80 100 2000 ••••.•• 630,000 '.~ 100
1993 •••••.• 415.000 590 100 !i>OI ••..••• 575,(I()O '.60 100
199 ........ HO.OOO 1.00 100 2002 ..••••• 715,000 US 100
1995 ....... 465,000 '.10 100 2003 ....... 765,000 ~.70 100
1996 ....... 495,000 1.20 100 200(. ...... S15,OOc} 1.7. 100
1997 •...••• £25,000 '-So 100 2005 •.•.•.• 870,000 '.80 100
1998 .•.•... 555,000 1.40 100 2006 ....... 930,000 1.80 100
Stone & Youngberg
August 10', 1900
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7.5
$9,65 M PALO ALTO REV. BONDS
Int. Rate Timing (11 Bond GO IndellJ
_. __ -4
6.9 .-.-.---.-~ .. -.. _ ....... _ .. --.
715 7/12 71~9 7126 8/2 8/9 8116 8/23
1990"
~Series BSeries 2
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