The Town of West Hartford sold $19.9 million in bonds last week, which will create savings of $1.85 million as the funds are used to refinance existing debt.
By Ronni Newton
The Town of West Hartford and Mayor Shari Cantor announced Friday that $19.9 million of bonds have been sold – a transaction that will result in a savings of $1.85 million in over the next six fiscal years.
“In essence we’re refinancing the debt,” West Hartford Director of Financial Services Peter Privitera, the town’s CFO, said Friday.
It’s common practice for underwriting firms to check the debt service scheduled of municipalities, and to initiate discussion if there appears to be a good opportunity to refinance, Privitera said.
He said that about five months ago the town was approached regarding a refinancing opportunity, and at that point it appeared that savings of $400,000-$500,000 could be generated.
Privitera said that as the process got underway, he reported to the Council’s Finance and Budget Committee that due to more favorable rates it appeared that the town would be able to realize savings of $1.5 million, and by the time the sale was complete, the savings actually exceeded $1.85 million.
In a news release, the town said that the present value of the future savings are approximately $1.78 million, or 8 percent, of the face value of the prior bonds.
“This is a really good opportunity for us,” Privitera said. While these are general obligation bonds, he said, the vast amount of the funds will be applied to outstanding debt for the Blue Back Square garages, significantly reducing that debt between now and 2026 when all of the bonds will be paid off.
“We’ve talked a lot about our bond rating, and why it’s important,” Town Manager Matt Hart said. “The better the rating, the lower the interest rate we’re going to pay and the less it costs us to borrow.”
The town’s AAA rating was reaffirmed by both Moody’s and Standard & Poors in January, and that, combined with excellent timing, has resulted in the successful sale.
The bond sale was actually oversubscribed, with offers totaling $51.3 million – more than 2.5 times greater than what the town was offering.
“There are a lot of companies out there that want to buy our bonds, buy our paper,” Privitera said.
The town said in a news release that Bill Lindsay of Hilltop Securities Inc. served as municipal advisor for the sale, and Matthew Ritter of Shipman & Goodwin served as bond counsel. The new bonds were underwritten by Raymond James Inc. of New York, NY.
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