Oyster Bay has sold $170.5 million in bonds that officials and the bond prospectus said was to pay off short-term debt that it used for capital projects.
The bonds paid off bond anticipation notes the town issued over three years, town officials said last week.
"Over the course of the last year, we've taken the course to convert most of our short-term debt into long-term bonds," Oyster Bay Comptroller Robert McEvoy said. This lets the town lock into low interest rates that could rise in the future.
It is the third bond issue by the town this year, after a $140.2 million bond sale in February and a $69.4 million refinancing in April. The latest bond issue was reported last week by several financial news services.
As of July 9, the town had $806.7 million in debt, including $565.4 million in bonds and $241.3 million of bond anticipation notes, which are short-term debt instruments typically paid off with long-term bonds. That figure does not include $41.5 million of bond anticipation notes sold after July 9.
Earlier this month, Standard & Poor's downgraded the town's debt from A-minus to BBB with a negative outlook. The rating agency cited the town's deteriorated liquidity, structurally imbalanced budget, weak fiscal management and years of deficits. The rating agency has repeatedly downgraded the town since 2011, when it had the highest possible rating of AAA, to its current level at two notches above junk bond status.
Town Supervisor John Venditto said the downgrade was not unexpected and that the town is in a "transitional period" since the financial crisis of 2008.
Downgrades generally increase the cost of borrowing. Though the town paid for bond insurance, pricing data from Thompson Reuters compared against the benchmark Municipal Market Data on Thursday showed that investors appeared to be demanding yields closer to that of uninsured debt. Bond insurers guarantee payment on bonds if the borrower defaults.
McEvoy said he was pleased with the interest rates the town received on the bonds.
As previously reported in Newsday, the town borrowed $30 million this month to make payroll.
The town disclosed Wednesday that because of a clerical error, on July 15 it failed to pay $472.50 due to bond holders but has since made the payment.