Broadband bonds go to market with A+ rating
The City’s intended offer has been updated from the original news release with the most recent Preliminary Official Statement.
Securities rating agency S&P Global Ratings has given the two series of bonds supporting Loveland’s fiber-optic broadband network construction and operation an A+ rating.
The bonds head to market in the coming weeks in two packages. The City’s Electric and Communications Enterprise intends to offer approximately $56 million in tax-exempt bonds in one series maturing in years 2032 through 2043, and another consisting of $28 million in taxable revenue bonds maturing in years 2023 through 2032 for a total of $84 million. Bonds will be offered in $5,000 denominations.
The A+ rating announced Wednesday, combined with interest rates that have dipped slightly, mean the city should fare well in the transaction that raises capital for the construction and initial operation of the fiber-optic broadband internet network that City Council approved earlier this year.
“This is the result of some really great teamwork within the City, with the broadband team, the Water and Power Department and the Finance Department all working so well together,” Acting Finance Director Alan Krcmarik said.
The City team, working with financial consultants and bond underwriters, has been finalizing the offering over the past several months. Krcmarik said the underwriting agency gave the City high marks for the work done.
“They told us, ‘You guys have not been in this business very long, but you act as if it’s something you’ve been doing all along,’” Krcmarik said.
S&P Global in its rating statement describes the bonds “to construct a fiber-optic telecommunication system that will provide high-speed internet and phone services.” The firm’s risk profile cites:
- Strong operational management assessment;
- Strong service area economic fundamentals;
- Strong market position;
- Extremely strong industry risk relative to other industries and sectors.
The rating is also based on the Loveland Water and Power business model, including “factors that offset the risks of providing telecommunication services that will compete against other providers in a dynamic marketplace.”
Earlier this year, Loveland City Council approved a broadband bond package allowing the newly created Electric and Communication Enterprise to issue and sell $95.42 million in bonds to finance the construction of the City’s broadband system. With financing secured, the broadband team has moved forward with critical steps including developing plans, processes and systems; hiring and onboarding key staff roles in engineering, operations, sales and marketing; finalizing the fiber-optic network design; setting-up facilities; developing the broadband brand and building a local call center.
Residents interested in receiving regular Loveland broadband updates are encouraged to register for email communication at cityofloveland.org/bradband. Contact us by email at broadband@cityofloveland.org(External link) or by telephone, 970-962-2010 for questions and comments.
