That’s what the Metropolis City Council did Monday night when it unanimously approved an ordinance to refinance its General Obligation Refunding Bonds.
Ward 1 aldermen Kim Brown and David Daugherty were absent from the meeting due to work obligations.
“That’s the bottom line — what we’re saving,” said city treasurer Kristy Stephenson. “And because of this, when we make our payment in December, we’ll already see a savings of over $17,000. Next year, when we have a whole year under our belts, we’re going to see a savings of over $74,000.”
The city issued the General Obligation Refunding Bonds in 2005 for infrastructure development at Harrah’s when the hotel was built. This year, those bonds were callable.
“It’s just a matter of interest rates — like many homeowners take advantage of refinancing their mortgage, we’re refinancing our bond issue,” she said. “Interest rates now are lower than when we issued the original bonds in 2005. Callable means that we can purchase back those bonds that are out in the market, issue them under a lower interest rate and then sell them again on the market.”
That move will save the city almost $1.25 million over the next 10 years, and at the end of that period, “everything is paid off,” Stephenson said.
At its July 16 meeting, Carl Ramey, a representative with Stifel Nicolaus, the underwriter for the $9.5 million bond, explained that when the bonds were issued, the city was giving a BBB+ credit rating by Standard & Poor’s.
Some three weeks ago, that was upgraded to an A. At Monday’s meeting, Ramey informed the council its rating has been upgraded to a AA, and the bonds have been insured.
With everything factoring in, that means that original $9.5 million bond is now $9,225,000.
••• TO READ THE ENTIRE STORY ONLINE, PLEASE SUBSCRIBE TO THE PLANET'S e-EDITION •••