Brookhaven Town supervisor Ed Romaine announced that S&P Global Ratings has assigned its AAA long-term rating to Brookhaven’s series 2018A and 2018B general obligation bonds. At the same time, S&P Global Ratings affirmed its AAA rating on the town’s existing GO bonds, with a stable outlook. Munistat, the town’s financial adviser, has estimated that this rating and bond sale has resulted in a $1.65 million savings for taxpayers based upon recent local municipal bond sales.
The rating is higher than that of the United States Treasury’s notes. “Brookhaven’s general obligation bonds are eligible to be rated above the sovereign because we believe the town can maintain better credit characteristics than the U.S. in a stress scenario,” S&P said in their rating announcement.
“Our financial team has worked hard to achieve this AAA stable rating, but the real winners are the taxpayers, who will save millions of dollars in the years ahead,” Romaine said. “We owe it to them to spend their money more wisely. I’d like to thank commissioner of finance Tamara Branson, chief of operations Matt Miner and councilman Jane Bonner for the work they have done to manage the town’s finances and keep us on the right track.”
Because of this rating, Brookhaven Town municipal bonds received lower interest rates, saving taxpayers money. The town received a 3.13 percent interest rate with a $730,000 premium. These bonds will finance construction of ambulance buildings, open space acquisitions, Cherry Grove dock improvements and other infrastructure projects. The $20.8 million general obligation bonds will be amortized over 20 years.
“Once again, Wall Street has recognized our hard work, strong financial practices and the way we carefully watch over town finances. As a result, taxpayers will save over $1.6 million as we improve our roadways, parks and critical infrastructure,” said councilman Neil Foley.
The Brookhaven 12-year bond sale of $37,411,700 (Series A) received an interest rate of 2.509 percent, which is 35 basis points below where the 10-year Treasury is trading today. The town received a premium of $4.3 million to reflect the 5 percent coupon rate. These bonds will fund improvements to parks, marinas, docks, roads, drainage and town facilities. The $37.4 million bond issue will be amortized over 12 years.
This is the second year in a row that the town’s 12-year bond sale has traded below the 10-year Treasury interest rate, and indicative of the high confidence Wall Street places in the town’s financial position and management.
In giving the town their highest rating, S&P cited the town’s:
- Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA) and a local stabilizing institutional influence
- Very strong management, with strong financial policies and practices under our Financial Management Assessment (FMA) methodology
- Strong budgetary performance, with operating surpluses in the general fund and at the total governmental fund level in fiscal 2017
- Very strong budgetary flexibility, with an available fund balance in fiscal 2017 of 40 percent of operating expenditures
- Very strong liquidity, with total government available cash at 60.7 percent of total governmental fund expenditures and
• Strong institutional framework score.