The school district of Broward County, Florida, issued $197.5 million in bonds to fund operating expenses on an interim basis as it awaits ad valorem property taxes to be collected next year.
The tax anticipation notes mature on June 28, 2024 and yield 3.45%. They pay interest at 5%. The securities received a rating of MIG 1 from Moody’s Investors Service.
“The MIG 1 rating reflects the strong credit quality of the Broward County School District (Aa2 stable), modest amount borrowed (approximately 17.5% of projected pledged ad valorem revenues), significant cash available at note set aside, and predictability of pledge revenues (ad valorem taxes),” according to Moody’s.
Broward County School District has the second-most enrolled students in Florida and the sixth-most in the United States. Proceeds from the sale of the bonds will fund the school district’s operations for the upcoming fiscal year.
Costs for the school district increased after a gunman killed 17 students in 2018 at Marjory Stoneman Douglas High School, which lies within the district. Families of the victims sued the school district, which ultimately settled for a total cost of $25 million.
The school district has $2.3 billion in debt outstanding, and it collects about $1 billion in ad valorem property taxes per year. The bonds issued this week are backed by those taxes.
J.P. Morgan Securities LLC served as underwriter on the issuance, purchasing the bonds for more than $200 million. The price reflected a premium of $2.7 million.