Town of Ocean City Bond Sale Receives Record Low Rate
OCEAN CITY, MD – (March 2, 2020): The Town of Ocean City recently sold $6,650,000 of General Obligation (GO) Municipal Purpose Bonds (tax exempt) and $1,115,000 of General Obligation Municipal Purpose Bonds (taxable) at a true interest cost of 1.7032 percent for the tax-exempt bonds and 1.4323 percent for the taxable bonds. The bond sale, which took place on February 27, received national interest in the municipal market with 11 prominent underwriters competing for the bonds. The bids, which mature at various times from 2021 through 2040, ranged from 1.7032 percent to 1.8823 percent for the tax-exempt bonds 1.4323 to 1.6051 for the taxable bonds.
After the sale, the bids were awarded by Mayor Rick Meehan to Fidelity Capital Markets for the tax-exempt bonds and BNYMellon Capital Markets for the taxable bonds. “The Town’s continued commitment to conservative financial management practices and strong budgetary flexibility allow the Town to easily adjust to any potential economic downturn,” stated Pamela Kelley of Wye River Group. “These characteristics are key to maintaining its reputation as a stable credit in the municipal bond market. That reputation, coupled with favorable municipal market conditions on the day of the sale, resulted in significant demand and historically low interest rates on its bonds.”
Proceeds of the new tax-exempt bonds will finance public works water and wastewater capital projects as well as refunding an installment loan. The proceeds from the taxable Bonds will finance the purchase of property on 67th Street which will be the site of a future water plant. “Given the current decline in interest rates to historically low levels, Ocean City benefited tremendously from the timing of the sale of the Bonds,” commented Ocean City Finance Director Chuck Bireley.
To further the good financial news, the Town received favorable bond ratings based on strong budgetary performance, healthy financial position and maintenance of solid reserves. S&P Global Ratings assigned a ‘AA+/Stable’ rating to the bonds and affirmed its “AA+” rating for existing GO debt. Moody’s Investors Service affirmed its ‘Aa2” rating on Ocean City’s debt and Fitch Ratings assigned its ‘AA’ rating with a stable outlook to the Town’s bonds.
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