SAN FRANCISCO - California's Fremont Unified School District sold its first bonds under a $650 million general obligation bond measure that was approved earlier this year.
The district sold $140 million of GO bonds in a competitive offering on Tuesday.
Bank of America Merrill Lynch submitted the winning bid with a true interest cost of 3.845%. Yields ranged from 0.13% with a 4% coupon in 2015 to 4% at par in 2046. Keygent LLC was financial advisor.
Fremont USD is a primary and secondary education school district in the southeast section of the San Francisco Bay Area. The district has 28 elementary school campuses, five junior high campuses, and five high school campuses, as well as one alternative school campus.
The bonds were approved by voters during the statewide primary election in June. Measure E authorized the district to sell $650 million of GO bonds, with an estimated payoff date by 2051.
"A previous needs assessment had identified $1.6 billion in needs, so $650 million is a start," said Therese Gain, director of facilities for Fremont USD.
Since the measure passed in June, the district has been putting a team in place to begin to evaluate the projects and start the design process, Gain said. The district has already selected a pool of architects and a pool of construction managers.
The bonds sold Tuesday are rated Aa2 by Moody's Investors Service and AA-minus by Standard & Poor's.
"The ratings reflect our view of the district's strong fund balances and large and affluent residential community that participates in both the San Francisco Bay Area and Silicon Valley economies," said Standard & Poor's credit analyst Kate Burroughs.
Moody's also cited the district's sizeable, stable tax base, which is returning to growth, and satisfactory liquidity and reserves.
Challenges include classroom capacity pressures from continued enrollment growth and a large capital program.
The bonds are secured by the annual levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the district.
