The Select Board approved the sale of a nearly $7 million bond anticipation note during an early morning meeting on Wednesday.

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 Wednesday, the Select Board approved the sale of a $6,966,964 bond anticipation note.

“This is just a standard operating procedure for us to be refinancing these things,” Select Board Vice Chair Doug Thompson said. 

The specific use of the $7 million bond was not confirmed during Wednesday’s meeting. However, the Select Board has held executive sessions recently to discuss the “purchase, exchange, lease or value of real property” for parcels at 153 and 187 Humphrey Street.

In February of 2024, the Select Board unanimously approved the sale of a $12,079,000 note at a 3.22% interest rate, including $8.7 million for construction of the new elementary school and $1.7 million to refinance maturing notes.

At the same time, the Select Board also issued $5.105 million in general obligation bonds at a 3.42% interest rate. Of that, $2.7 million was to be used to refinance maturing notes, with the remaining funds allocated to various capital projects approved between 2020 and 2024. An additional $1.65 million supported land acquisition.

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 town received four bids, according to Town Treasurer Patrick Luddy. The lowest net interest cost to town, “our best deal,” was set at 3.928%. 

The steps for the debt issuance this year were scheduled in July, according to Luddy. The October 15 meeting was held to align with the bid acceptance timeline and the scheduled closing next week.

S&P Global Ratings assigned to Swampscott’s $7 million general obligation bond anticipation note maturing on October 22, 2026 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.”

In addition, 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, which was 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.”

Swampscott’s sale comes as the overall number and value of State House notes issued in Massachusetts has declined in recent years, from 278 notes totaling $196.7 million in the 2023 fiscal year to 220 notes totaling $138 million in the 2025 fiscal year. According to the state, this shift reflects growing complexity in the capital market and a trend toward issuing notes with full financial disclosure and wider bidder participation.