Nixa sells $19.87 million in utility bonds as Moody's affirms strong ratings

Jessica Londola of Baker Tilly told the Nixa City Council that the city sold about $19.87 million in bonds last week to fund utilities, drawing two bids that represented 30 banks and a winning bid from a Milwaukee firm at a total interest cost of about 4.20005 percent. "So, last Tuesday, the city received two bids representing 30 banks," Londola said, adding that the sale followed parameters the council approved in April limiting principal to $20 million and a maximum yield well above the winning bid.

The sale, Londola and staff said, finances work for the utilities enterprise and is backed by strong underlying credit: Moody's assessed the city's underlying rating at A2 and assigned an A3 on the appropriation-risk bonds. Londola said those ratings reflect the city's solid resident income base, sound financial management and manageable long-term liabilities.

Why it matters: City officials stressed the sale keeps near-term costs manageable while enabling utility projects to move forward. Londola said the city will not make its first principal-and-interest payment until 2027 and that the financing structure keeps the annual debt-service burden within projected reserves.

Council members asked about budgeting assumptions and payment schedules. Londola said the sale assumed a 20- or 30-year amortization profile; staff said interest-only payments and first principal payments are timed to fit the utility cash flow, and that water debt service will be tighter because of an existing RD system payment that drops off in 2032. "Water will be a little bit tight because we do have the RDE payment that we make, but that falls off in 2032," Londola said.

Next steps: The bond proceeds are earmarked for utility enterprise capital projects. Staff and the bond team said they will return with standard closing documents and continue to monitor the utility budgets as principal payments begin in 2027.