NTPS Completes Second Round of Municipal Bond Financing

North Thurston Public Schools entered the next phase of its long-term capital facilities plan with the sale of $23.78 million of municipal bonds on October 13, 2021 (expected to close on November 13, 2021). The district completed the first-round sale of $99.44 million of bonds in June 2020. Proceeds from both sales provide the necessary capital to continue work on the projects approved by voters at the February 11, 2020, special election.

On September 24, 2021, NTPS completed a major step in the process of preparing for this issuance of debt when it received affirmation of its two underlying credit ratings, Aa3 and AA-, issued by Moody’s Investors Service (“Moody’s”) and S&P Global Ratings (“S&P”), respectively. Both rating categories are the fourth-highest ratings a municipal entity may receive, placing the NTPS credit ratings in the upper echelons of all municipal entities.

Investors relied on these ratings, and the associated credit opinions created by the rating agencies when deciding whether to invest in the NTPS municipal bond offering. With municipal bonds, investors view the credit rating as an indication of risk (i.e., likeliness to default on payments). A higher bond credit rating results in lower interest rates due to investors’ belief this is an indication of reduced risk.

In the rating agency’s evaluations, they noted many factors that led to the high credit rating, including:

  • A solid financial position with satisfactory reserve levels
  • Strong voter support of NTPS levies
  • A growing local and regional Puget Sound economy
  • Good fiscal management practices and policies

Additionally, NTPS secured enhanced ratings for the bonds via participation in the Washington State School District Credit Enhancement Program. This program, which carries an Aaa rating from Moody’s (highest possible) and an AA+ from S&P (second highest possible), is only available to Washington school districts that issue voter-approved debt. This enhancement further improved investor demand for the bonds, lowering the ultimate borrowing cost for the debt.

“North Thurston’s school board and administration have worked diligently to secure all the pieces necessary to make this a successful bond sale. Success is measured by the ultimate borrowing cost for the bonds. The lower the cost, the lower the tax burden incurred by our community. All of our efforts strive to provide a result that truly honors the community’s support,” said Dr. Debra Clemens, Superintendent.