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Rating: <br />The City's most recent bond issues were rated by S&P Global Ratings. The current rating on <br />those bonds is "AA+". The City will request a new rating for the Bonds. <br />If the winning bidder on the Bonds elects to purchase bond insurance, the rating for the issue <br />may be higher than the City's bond rating in the event that the bond rating of the insurer is <br />higher than that of the City. <br />Basis for Recommendation: <br />Based on your request to issue Bonds and your objectives, financial situation and need, risk <br />tolerance, liquidity needs, experience with the issuance of Bonds and long-term financial <br />capacity, as well as the tax status considerations related to the Bonds and the structure, timing <br />and other similar matters related to the Bonds, we are recommending the issuance of Bonds <br />as a suitable option. <br />Method of Sale/Placement: <br />We are recommending the Bonds be issued as municipal securities and offered through a <br />competitive underwriting process. We will solicit competitive bids for the purchase of the <br />Bonds from underwriters and banks. <br />We will include an allowance for discount bidding in the terms of the issue. The discount is <br />treated as an interest item and provides the underwriter with all or a portion of their <br />compensation in the transaction. <br />If the Bonds are purchased at a price greater than the minimum bid amount (maximum <br />discount), the unused allowance may be used to reduce your borrowing amount. <br />Premium Pricing: <br />In some cases, investors in municipal bonds prefer "premium" pricing structures. A premium <br />is achieved when the coupon for any maturity (the interest rate paid by the issuer) exceeds <br />the yield to the investor, resulting in a price paid that is greater than the face value of the <br />bonds. The sum of the amounts paid in excess of face value is considered "reoffering <br />premium." The underwriter of the bonds will retain a portion of this reoffering premium as <br />their compensation (or "discount") but will pay the remainder of the premium to the City. The <br />amount of the premium varies, but it is not uncommon to see premiums for new issues in the <br />range of 2.00% to 10.00% of the face amount of the issue. This means that an issuer with a <br />$2,000,000 offering may receive bids that result in proceeds of $2,040,000 to $2,200,000. <br />For this issue of Bonds we have been directed to use the net premium to reduce the size of <br />the issue the net proceeds for the project. The resulting adjustments may slightly change the <br />true interest cost of the issue, either up or down. <br />The amount of premium can be restricted in the bid specifications. Restrictions on premium <br />may result in fewer bids, but may also eliminate large adjustments on the day of sale and <br />unintended impacts with respect to debt service payment. Ehlers will identify appropriate <br />premium restrictions for the Bonds intended to achieve the City's objectives for this financing. <br />Presale Report <br />City of Ramsey, Minnesota <br />October 11, 2022 <br />Page 2 <br />