SJBP’s improved bond rating helps in sale

Published 12:00 am Friday, July 17, 2009


EDGARD – St. John Parish officials said Tuesday that a new higher bond rating helped the parish land a 4.15 percent interest rate on the sale of $29 million worth of general obligation bonds for various infrastructure improvements throughout the parish.

St. John Parish bond attorney Hugh Martin told the St. John Council that a new rating from Standard and Poor’s Rating Services helped the parish secure a larger number of quality bids for the parish’s bonds. Martin said the parish’s new rating was a “two-step increase” of a rating that was good to begin with.

“This is a significant increase and it shows the stewardship between the council and the administration,” Martin said. “This is the first time in my 30 years of doing this that I have ever seen a two step increase in bond rating.”

St. John Public Information Officer Buddy Boe said a group of council members and parish officials traveled with Martin to New York last month to meet with buyers for the bonds and campaign for a better rating. He said the group was armed with a plethora of numbers and documents that showed the strength of the St. John Parish Community and its tendency for new growth.

“Our economic situation looks better than other regions in the nation,” Boe said. “We have a stable housing market and lots of industry growth across the board. The better rating is a nod to the parish’s growth in the past and a recognition of future growth.”

Boe said it was the first time the parish had requested a rating from Standard and Poor’s, who gave the parish an A+ bond rating. He said the parish also sought an increase from Moody’s Investor’s Services, but the firm kept the parish’s rating at A3.

“Moody’s uses a ‘mixture equation’ to determine economic stability,” Boe said. “They were slightly more critical of the parish’s ‘lack of diversity in manufacturing and industry.’ They concluded that we have a heavier concentration of petrochemical industry, so they kept it the same.”

As a result of the Standard and Poor’s rating, Martin said the parish was able to receive lower interest rates on the bond loans. He told the council that the parish received five bids on the bonds and said that each bid’s interest rate came in well below the Bond Buyer Index’s average interest rate of 5.64 percent.

Martin said Sterne, Agee and Leach Inc. submitted the low bid of 4.15 percent. He said the highest interest rate bid of 4.49 percent came from Jeffries and Co. Inc. The Council accepted the low bid at their regular meeting in Edgard Tuesday.

Boe said the low interest rate could save the parish about $750,000 in interest over the life of the loans. He said the bonds would be repaid with revenue from an existing 3-mill property tax. He said each mill generates about $274,000 a year. The parish is expecting to have the bonds paid off by 2029.

Now that the parish has secured a buyer for the bonds, Boe said residents will begin to see real progress on many of the projects tied to the bond issue.

“That’s not to say we have been waiting for the bonds to sell,” Boe said. “Meetings are happening daily and we have made lots of progress in the design phase of several projects on the table. We estimate that by the end of this year or the beginning of next year, residents will see some of these projects moving.”