NEW YORK - The Navajo Nation struck an agreement, which took decades to develop, with KeyBanc Capital Markets marking the first time in history that the Nation has authorized the issuance of bonds on the world market.
The deal will give the Nation increased financial leverage by allowing the Navajo Nation to refinance a $60 million loan, which was used along with stimulus funds from the American Recovery and Reinvestment Act in 2010 for the construction of public safety and judicial complex facilities across the Nation, including the communities of Kayenta, Tuba City, Crownpoint, Ramah, and others.
"It's very humbling to know that we have leaders that have the understanding and the foresight to see the benefits of this for years down the road," said Council Delegate Alton Joe Shepherd, who sponsored legislation that approved the bond financing deal on June 30.
Shepherd also praised past leadership for putting forth the bond financing initiative. He has previously stated that the issuance of bonds on the world market diversifies the Nation's financial portfolio and will save the Nation millions of dollars over the life of the extended loan.
"As leaders, we have to continue looking forward to see what else we can do to help our people," Shepherd said. "There are many needs on the Navajo Nation."
Navajo Nation Council Speaker LoRenzo Bates said the deal is a small step forward when considering the big picture. He added that the sale of bonds woiuld build the Nation's financial credibility and attract investors.
"This is the first step to entering a financial world outside of the Navajo Nation by way of bond issuing," Bates said. "It began with the original loan and progressed to this point."
Council Delegate Tom Chee, who served on the Council's Bond Negotiating Team, along with Council Delegates Nelson S. BeGaye, Raymond Smith, Jr., and Benjamin Bennett, said the deal reflects the Nation's sovereignty and pointed out that no federal officials were involved in the process.
"Having grown up on the Navajo Nation on a sheep camp, never did I imagine I'd be witnessing this historic signing that symbolizes financial growth for the Nation," Chee said.
The bond negotiating team met with KeyBanc officials on numerous occasions over the last several months to negotiate and develop the final terms of the agreement.
On Nov. 5, KeyBanc Capital Markets priced the Nation's General Obligation Refunding Bonds totaling $52.9 million, carrying a BBB plus credit rating from the Standard and Poore. According to KeyBanc officials, the bonds were well received by investors. The Navajo Nation currently carries an overall "A" credit rating.
"This landmark transaction is an endorsement of investor confidence in the Navajo Nation," said Geoff Urbina, managing director with KeyBanc Capital Markets Public Sector. "It allows the Nation to diversify its financing options with respect to additional infrastructure and other capital projects by expanding the Nation's access to the capital markets at attractive rates."
"Achieving this milestone positions the Navajo Nation well to finance its infrastructure needs," said Doug Goe, partner with Orrick Herrington & Sutcliffe LLP.
Council Delegate Seth Damon, who chairs the Council's Budget and Finance Committee (BFC), thanked his council colleagues for their support and KeyBanc officials for providing information and answers to the council on numerous occasions, adding that he initially opposed the deal until he gained a thorough understanding of the benefits and advantages.
BFC Vice Chair Dwight Witherspoon spoke of the need for the Nation to have its own bank to provide financial opportunities to the Navajo people, pointing out that Navajo people living on the Navajo Nation are not afforded the opportunity to accumulate wealth through land and home ownership. He said that the Nation having a bank would provide unique opportunities.
Also in attendance for the signing were Council Delegates Lee Jack, Sr., Tuchoney Slim, Jr., and Mel R. Begay, who each serve as members of the Budget and Finance Committee. Acting Controller Robert Willie executed the final documents Nov. 16 with the deal closing Nov. 17.
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