We may not be earning a lot of money on our City investments these days (which if you’re wondering are low risk certificates of deposits) but the flip side of that is borrowed money is cheaper than it’s been in decades. Our City Finance Director reports that this week the City received bids on short term bond anticipation notes that we use to refinance some of our debt and the rates came in with a 1% yield and Coupon Rate of 1.5%. Those are really terrific rates. Rather than locking into longer term interest rates over the last 5 years we gone back into the market each year and each year the rates have come in lower — saving the City over $700,000 in debt payments.
Here’s the general details from Dave Coffee, the City’s Finance Director:
Dave, I received good news this week from our debt underwriters at KeyBanc. The KeyBanc representatives confirmed our BAN sale with the new yield at 1.00% and a Coupon rate of 1.50%. This compares to the current yield at 3.30% with a Coupon rate of 3.75% on the existing debt. In real money terms the interest expense goes from $154,500 to $57,300 but of course the principal is being reduced by $300,000 also.
And if you are fluent in financial-speak here’s the details on the details of the transaction from KeyBanc:
We are pleased to announce that the pricing of the City of Kent, OH Various Purpose Bond Anticipation Note Issue, Series 2009 has been successfully completed. Below please find the Final Pricing Numbers for everyone’s information.