The City of Houston today secured an incredibly
low interest rate of less than 1% on the sale
of $175 million dollars in Tax and Revenue Anticipation
Notes (TRANS) via the Internet.
The Treasury Division of the Office of the Houston
City Controller conducted the sale. A total of
11 investment firms participated in the online
auction. Five of them will share in the winnings.
"The interest rate of .85955% represents the
lowest rate anyone can remember. The results are
better prices for the City's bonds and lower costs
to the taxpayers," said Judy Gray Johnson, Houston
City Controller.
The online auction method allows buyers to bid
against each other on an electronic platform,
thus introducing competition. Representatives
of the City are able to view the bidding process,
ensuring the integrity of the auction. The use
of the Internet greatly speeds up the selling.
Bidders can wait until just before the deadline,
submit their bids, and know almost immediately
if they have won. This reduces the need for bidders
to cushion their prices to protect against adverse
market moves while the City is determining who
won.
The City first sold notes via the Internet in
2000.
TRANS are routinely issued near the beginning
of a new fiscal year. The proceeds from the sale
will provide the City with operating revenues
until property taxes begin to flow in at about
mid-year.
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