N.Y.’s East Hampton Plans First Bond Sale Since ’08: Muni Deals

The village of East Hampton, the New York beach town where billionaire Ronald Perelman and fashion designer Calvin Klein own homes, plans to sell $3.3 million of general-obligation debt in its first bond issue since 2008.

The Long Island municipality, where the population triples to more than 4,000 during the summer, plans to offer the tax-exempt debt this week. The village, 100 miles (160 kilometers) east of Manhattan, will use the proceeds to reconstruct its emergency-service building and improve three main roads. The repairs are unrelated to Hurricane Sandy, which devastated Long Island beach towns last year.

The sale follows the steepest drop in the municipal market since the final three months of 2010, as local bonds lost 3.3 percent last quarter, Bank of America Merrill Lynch data show.

“I expect the sale to go very well,” said Larry Cantwell, the village administrator. “East Hampton Village is one of the most stably financed local governments anywhere. The village has had an accumulated surplus every year, for 30 years.”

The bonds have an Aa2 rating from Moody’s Investors Service, the third-highest level. The ratings company, which has a positive outlook on the municipality, cited a “sizeable, affluent tax base,” surpluses and debt service of a “relatively manageable” 4.9 percent of spending in fiscal 2012. Cantwell said that after this week’s sale, annual debt payments will be less than 8 percent of the village’s operating budget.

The competitive deal, with a final maturity of June 2032, isn’t backed by insurance, unlike the village’s $2.6 million debt sale in 2008.

Ten-year bonds in the 2008 sale were priced to yield 4.4 percent, or about 0.55 percentage point below an index of benchmark debt, data compiled by Bloomberg show.

The village is a hamlet of the town of East Hampton, which also includes Amagansett, Montauk, Springs and Wainscott.

To contact the reporter on this story: Emily Freeman in New York at efreeman14@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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