Bergen County, N.J., this week will offer $1 million of tax-exempt general obligation bonds directly to the public, a transaction that officials anticipate will save money for both the county and bondholders. The county will sell the 10-year capital appreciation bonds today through Friday via its Web site, www.co.bergen.nj.us/bcresources/mini-bonds.html. The county will offer the mini-bonds, as officials are calling them, in $650 denominations that will grow to $1,000 at maturity in 2017 at a yield of 4.35%. Bergen County Executive Dennis McNerney said his administration looked into selling tax-exempt bonds directly to the public due to local residents contacting the administration, looking to buy Bergen GO debt when the county has gone to the bond market in the past.“And what would happen was, we were getting such a positive response of people calling us up and saying, 'Can we just buy the bonds now?’ ” McNerney said. “So, the Treasury and the freeholders came up and said, 'Look, why don’t we just offer them directly to the public?’ And that’s what we’re doing.”US Bank NA is trustee for the bonds and there is no outside financial adviser. Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein is bond counsel. Moody’s Investors Service rates Bergen County a natural Aaa. Standard & Poor’s and Fitch Ratings do not rate the credit.McNerney said the county may consider other direct bond sales in the future, depending on the reception this week’s bond offering receives. Officials kept the size of the deal relatively small at $1 million in order to test the waters, as the exact amount of savings the county could generate from the deal has yet to be finalized.“We haven’t determined that yet and that’s why it’s a small amount, but we feel we’re going to get a savings on one side, and the bondholders are expecting a savings — and that’s important because they’re taxpayers as well,” McNerney said. “So, maybe they’re getting a tax-exempt yield of 4.35% but they may be getting it less if they go through a broker. So there’s a savings there, we’re positive on that.”The preliminary official statement for the offering states that the county gives no assurance that a secondary market will ever develop for the bonds and that prospective purchasers should be prepared to hold them to maturity. If the sale goes well, officials will consider more direct bond deals, not only for the county but also for the Bergen County Improvement Authority. McNerney said the authority’s bond sales also receive a lot of local interest, as the county is comprised of 70 municipalities and 70 school districts.“We’re always working with them, so it’s just another tool that we can use in the future,” McNerney said. “And we’ll gauge the interest of this one, but so far the interest has been positive.”The $1 million of bond proceeds will help finance safety improvements and upgrades at the county courthouse in Hackensack. Those projects will also receive proceeds from Bergen County’s recent $69 million competitive sale, which priced on Oct. 3 with Merrill Lynch & Co. as underwriter. Those bonds offered maturities from 2008 through 2023 with yields ranging from 3.3% with a 3.5% coupon in 2008 to 4.14% with a 4% coupon in 2023. The county is located at the northeastern tip of New Jersey and is among the most affluent in the state.
