Missoula County officials said Tuesday that bonds financing construction of the Missoula Public Library sold more quickly than expected, saving taxpayers around $400,000.
Retail sales of the general obligation bonds, valued at $23.7 million, began last week with a preferential order that opened to individual investors within the county.
Investors in Montana and across the country had second and third dibs, respectively.
Andrew Czorny, the county’s chief financial officer, said underwriter Bank of America agreed to a priority sale lasting through 4 p.m. After sales opened at 8 a.m., buyers had purchased $21.4 million in retail orders in nearly all maturities within the hour.
That included $1.6 million coming from 25 individual investors in Montana. By 10 a.m., Czorny said, an additional $4 million in retail orders were received, with further over-subscriptions on some maturities.
“The finance team decided to take advantage of this seller’s market and strong demand by opening the sale to institutional buyers a day earlier than planned,” the county said Tuesday in a statement. “By 2 p.m., high investor interest in quality Montana bonds produced $56.4 million in orders.”
By that time, the debt issuance was 2.3 times oversubscribed, the county said. That provided the county, its underwriters and financial adviser the ability to reprice oversubscribed maturities, lowering the interest expense to 3.23 percent.
As a result, Czorny said, Missoula County reduced the annual debt service in 2019 by more than $91,000, in addition to $304,000 over the remaining 19 years of the voter-approved general obligation bonds, which mature in 2038.
“The county’s financial health and AA rating are critical in providing Missoula County access to the credit markets at a low cost,” said Czorny. “The result is lower interest rates, and Missoulians will enjoy an immediate reduction in the taxes they will pay for the voter-approved library bond debt payments.”
The bonds will help cover the cost of design and construction of the new library, which broke ground last month. It also covers furnishings and landscaping.
Voters approved the $30 million bond issue in 2016, which will pay for most of the $36.7 million project.