STONINGTON — Town officials and the town's financial adviser have announced that the refinancing of $7.2 million of bonds issued in 2012 will save close to $600,000 in interest costs over the next dozen years.
Matthew A. Spoerndle, senior managing director of Phoenix Advisors in Milford, Conn., said he had been monitoring the town’s debt in the event that there would be an opportunity to refinance bonds at lower rates. “Whenever there is an opportunity to save an issuer money, and lower the overall debt burden on taxpayers, we have to make the most of that,” he said in a press release from the Board of Selectman's office.
Spoerndle, who has managed Stonington's bond sales for a decade, announced in October that the town's bonds had been upgraded from AA1 to AAA, Standard & Poor’s highest level, allowing it to take advantage of lower interest rates.
Interest rates have been declining recently as a result of the Federal Reserve Board's efforts to sustain U.S. economic growth and employment. In addition, the municipal bond market posted strong results in 2019. As bond prices rise, interest rates decline.
As Spoerndle stated, “Interest rates have remained low and when you combine that with the fact that the town has a AAA bond rating, everything lined up perfectly.”
First Selectman Danielle Chesebrough said, "This is a significant saving for the town, and a timely reminder as we launch next year's budget cycle. The AAA rating and subsequent saving of over half a million dollars was only possible thanks to years of hard work from members of the Board of Finance, working closely with others in town government to be fiscally prudent. When looking to next year's budget we need to be thinking about balancing short-term needs with investments for the future."
In all, the town issued new bonds to refinance bonds that were issued in 2012 and were eligible to be refinanced. In order to proceed with a tax-exempt refinancing, only bonds that have reached their call date can be included. The bonds will be underwritten by Piper Jaffray, the low bidder on the town’s October sale. The issue will close on Jan. 6.