The Select Board approved the sale of a bond anticipation note for over $2.5 million during its meeting Thursday at the Senior Center.

“We went through a bid process and Oppenheimer was our main bid, just under 3.5%,” Liam Brailey, Swampscott’s treasurer and collector, said, noting that the first bidding process did not receive any responses.

In Massachusetts, a town bond anticipation note is a short-term borrowing tool. The sale is managed by the Bureau of Accounts through the State House notes program. Bond anticipation notes can be issued for a term of up to two years and used for a variety of purposes, including capital projects, recreation, school remodeling and building repairs. On Thursday, the Select Board approved the sale of a $2,527,823 bond anticipation note.

Bond anticipation notes are typically repaid using the proceeds from long-term general obligation bonds.

Notes are sold to underwriters or broker syndicates through a bidding process. 

“The main project driving this is the fire truck, which came last week” said Brailey. “Pretty simple.”

In February, S&P Global Ratings assigned to Swampscott’s $10.8 million general obligation bond anticipation note maturing on March 7, 2027 its “SP-1+” short-term rating, which reflects the liquidity factors and market access risks. “SP-1” means strong capacity to pay principal and interest. The plus designation is issued when a short-term municipal note has been determined to “possess a very strong capacity to pay debt service.”

Last October, S&P Global Ratings affirmed its “AAA” long-term rating on the town’s existing general obligation debt and its “SP-1+” short-term rating on the town’s outstanding general obligation bond anticipation notes.

“The outlook on the long-term rating is stable,” according to S&P Global.

The S&P Global decision, previously issued on October 2, said the long-term rating reflects the expectation that Swampscott will “maintain a stable financial profile along with strong reserves as it addresses both its capital needs and long-term liabilities and that incomes in the near term will likely return to extremely strong levels, which we generally consider to be at least 150% of the national level.”

The financial ratings also noted that Swampscott is actively addressing coastal vulnerabilities that impact taxable properties. The town has identified needs and pursues grant funding through the Massachusetts municipal vulnerability preparedness program. Swampscott has also prepared a comprehensive harbor waterfront master plan, according to S&P Global. 

“We consider Swampscott’s social and governance risks neutral within our analysis,” S&P Global wrote.

S&P Global’s rating could be lowered if incomes do not rebound to “extremely strong levels” over the next few years. A negative rating could also be given if financial performances were to deteriorate, which would lead to a sustained draw on reserves, or if debt burden and pension liabilities were to materially increase above current levels. 

Though, this is “unexpected given the stability of financial operations and the strength of financial management policies.”