Merrill Lynch error makes it the low bidder Miscue saves county $236,000 on bond sale

March 12, 1997|By Craig Timberg | Craig Timberg,SUN STAFF

A transcribing error by Merrill Lynch made it low bidder in Howard County's $40.7 million bond sale yesterday -- and saved the county $236,000 in borrowing costs over the next 20 years.

The annual bond sale allows Howard to borrow tens of millions of dollars each year to build schools, parks and roads while spreading the costs over many years. Eight bidders pushed the interest rate to less than 5.21 percent yesterday, the lowest in memory, said Budget Director Raymond Wacks.

When county officials began opening the bids shortly after 11 a.m., First Union bank appeared to be the lowest bidder with a rate of 5.2211 percent, with Merrill Lynch's bid slightly above that figure.

But as county officials reviewed the details that backed up each bid -- details that are the final word in this process -- an apparent mistake was discovered in the Merrill Lynch bid. When that was factored in, its bid was lowered by almost .02 percent, to 5.2066 percent.

Despite the error, Merrill Lynch officials stood by the bid.

The difference means a savings of $236,000 in total bond costs for the county.

"The decimal points are pretty important around here," Wacks said.

Howard County has a triple A bond rating from two of the three bond-rating agencies -- the highest available -- a mark of prudent fiscal management that leads to lower interest rates and borrowing costs.

It achieves that rating despite having Maryland's highest per-capita debt -- $1,650 for each of the county's 228,000 residents -- due to of the demands of fast suburban growth in the past 30 years. About half of Howard's $384 million of general-obligation debt is from school construction and renovation.

The county also sold $5.1 million of 30-year bonds for water and sewer projects yesterday. The low bidder was Alex. Brown & Sons, which bid 5.48 percent.

Pub Date: 3/12/97

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