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Ji <br />Elk River <br />Municipal Utilities <br />13069 Orono Parkway <br />Elk River, MN 55330 <br />March 14, 2007 <br />To: Elk River Municipal Utilities Commission <br />Jerry Takle <br />Jim Tralle <br />Jerry Gumphrey <br />From: Theresa Slominski <br />Re: 2007 Bond Issue $2,875,000 <br />phone: 763.441.2020 <br />Fax: 763.441.8099 <br />Moody's assigned a bond rating of A2 for our bond issue. (In the investment world, this a <br />a "Good" rating on the scale of Exceptional, Excellent, Good, and Adequate.) This <br />reflects our modest yet quickly growing customer base, ample coverage of historical and <br />projected debt service with satisfactory legal provisions, and recently increased debt ratio <br />that is expected to moderate going forward given the lack of additional borrowing plans. <br />This is the same rating as our 2006 bond issue. <br />The bond sale occurred on the morning of March 5`'' with 5 bidders and <br />Cronin/UBS/Citigroup as the low bidder at 4.0699%. The costs of issuance and fees <br />were lower than expected, so the construction fund will have about $40,000 more than we <br />previously anticipated. The closing date is set for March 28th. <br />