Hamilton’s Credit Rating Gets the Credit for Savings in Recent Note Sale
At a time when interest rates are rising for most New Jersey towns, Hamilton Township is bucking the trend and enjoying savings for its taxpayers.
Thanks in part to Standard and Poor’s Rating Services’ reaffirmation of Hamilton’s AA category bond rating and its increased assessment of the town’s financial management back in March, Hamilton’s recent sale of bond anticipation notes drew one of the lowest interest rate yields for New Jersey towns in recent weeks.
Bond anticipation notes are short-term interest-bearing securities, which governments typically use for funding capital projects like road repairs, sewer infrastructure, recreational facilities and equipment, prior to issuing long-term bonds. The notes result in a less expensive alternative for most towns prior to the issuing of long-term debt.
At a time when New Jersey towns are borrowing at rates of 0.5 percent on the low end of the spectrum to over 1.0 percent at the high end, Hamilton Township yielded an impressively low 0.27 percent).
And even as interest rates are starting to rise for most towns, Hamilton’s was nearly cut in half from the already low rate the Township enjoyed last year.
What does that mean for taxpayers? It means that for its recent $37 million sale of bond anticipation notes, Hamilton Township saved approximately $90,000 in interest costs with this year’s lower interest rate from what the same sale of bond anticipation notes would have cost last year.
Additionally, Hamilton’s recent sale attracted the attention of several investors -- a credit to Hamilton’s bond rating, financial strength and strong management, as well as an indication that investors feel the township’s finances are stable and that their return on investment is safe when compared to other towns.
“Continuing needed road repairs, sewer system improvements and long-term investments in the parks and recreational facilities that our families and children enjoy are a priority to me and to the residents of Hamilton Township. And because of our government’s strong financial management, conservative budgeting practices and positive assessment by Standard and Poor’s earlier this year, Hamilton taxpayers are benefitting from the lower interest rates we achieved during this recent sale of bond anticipation notes. I believe it shows that Hamilton Township’s stable finances and strong management are paying great dividends for our taxpayers,” said Hamilton Township Mayor Kelly A. Yaede.
In March, Standard and Poor’s credited Hamilton’s conservative budgeting practices and low debt and the community’s thriving local economy when reaffirming its bond rating, “stable outlook” and increasing the town’s financial management assessment:
“The stable outlook reflects Standard & Poor's opinion of Hamilton Township's improved finances and management practices. We expect the township to maintain, what we consider, its good finances due to, what we regard as, its conservative budgeting practices. We believe the township's thriving local economy and access to diverse regional employment centers, strong wealth and income, and low debt are stabilizing rating factors. Therefore, we do not expect to change the rating within the outlook's two-year period.”
“Our recent sale of bond anticipation notes produced a great result for our government’s finances and its taxpayers,” said Hamilton Township Chief Financial Officer John E. Barrett. “And moving forward, we will continue to adhere to the same prudent practices and procedures that have helped us achieve this most recent financial success.”