The Lowndes County School District board of trustees accepted a bid from Raymond James and Associates in Memphis on its $44 million worth of general obligation bonds Tuesday.
Bids were presented by board consultant and Columbus lawyer Jim Young.
Raymond James’ net interest rate was 3.04 percent. The district plans to pay off the bond in 17 years.
Young said Standard and Poors gave the district a AA- credit rating when they visited in June. This stamp of approval garnered much attention in the financial world.
“There was a lot of interest out there for the bonds across the country,” Young said. “You had bidders you frequently don’t see on Mississippi school issues submitting bids here.”
Young said Raymond James signed with a syndicate of underwriters, which includes Morgan Stanley and Fidelity.
The three other finalists included: R.W. Baird at 3.09 percent; Bank of America at 3.118 percent; Hutchinson- Shockey at 3.4541 percent.
The district will close on the bonds Sept. 15 and get all $44 million in the bank that day.
“It’s going to be quite a while before we need it, can we invest any of that money?” asked school board trustee Wesley Barrett.
“Absolutely,” Young said.
He recommended the board consider bidding out an investment contract or hiring an investment adviser, but he cautioned the board to wait to see what happens with federal interest rates in September when many in the financial world believe the interest rate will change.
There is a sizable piece of the bond construction that will be used immediately, but the majority of the money won’t be used until 2017, Young said.
The bid also included a re-offering premium of $1,775,267 in addition to the $44 million.
“That amount, the premium, is typically put in the debt services fund and will be used to make a portion of the first year payment,” Young said.
Board president Jane Kilgore motioned to accept the bid from Raymond James and was seconded by Barrett. The motioned passed 3-1, with Jacqueline Gray opposed and Brian Clark abstaining.
The board met for about 20 minutes in executive session to discuss land purchase for the centralized career-technical center. No action was taken.
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