Billings priced $5.36 million in unrated bonds Tuesday for a special improvement district in a competitive sale that drew only one bidder, D.A. Davidson & Co., at a true interest cost of 7.9658%.
The underwriter priced the Billings Special Improvement District No. 1385 bonds to yield between 5.4% for 2011 maturities to 8.2% for 2028 maturities, according to Thomson Reuters.
The bonds are secured by assessments on property that is planned for retail development, anchored by a Cabela’s store, a destination retailer for hunting, fishing, camping, and related outdoor equipment. Proceeds will finance infrastructure in the district.
The bonds are secured by assessments on properties in the Special Improvement District, said Pat Weber, the city’s financial services manager. The city had sought a rating from Standard & Poor’s, but was unable to obtain one because the rating agency “got hung up on some language in our state law,” Weber said.
The deal couldn’t wait, he said.
“From the time we let the contracts, the financial world fell apart,” Weber said. “We were already committed to a contractor to make payments. We will definitely be changing the way we do business.”
The Cabela’s store is scheduled to open in the summer. The stores are built as destinations to draw shoppers from long distances, and the store will be the first Cabela’s in Montana. More retailers are expected to follow.
Springsted Inc. is the financial adviser.
Weber said he expects Billings to refinance the bonds in about six years.
