Thanks to effective use of the markets, Darien financiers have reduced the town’s outstanding debt by $3 million, and reduced the effective interest rate on refunded bonds to 1.71%.
This lower rate results in $4,574,200 savings over the life of the bonds, but most of the savings are realized over the next four years, said First Selectman Jayme Stevenson.
Liz Mao, Board of Finance chairman, told The Darien Times that the town has been examining potential bond refinancing for the past several months, as interest rates have declined, creating a market ripe for reducing the town’s debt service.
The town issued $33.6 million in bonds to refund $35.2 million in bonds, Mao said. The refunded debt had an average maturity of 7.2 years, which was shortened to 7.1. These measures should help relieve budgetary pressures over the next few years, Mao added.
“[T]his refinancing goes a long way to reduce our debt service burden,” Stevenson wrote in an email.
Last December, Moody’s announced Darien had been removed from a watch list after the town was one of 177 top rated municipal bond issuers on review for possible downgrades last summer. In March, the bond rating service announced Darien retained its Triple A rating. The recent refinancing further strengthens Darien’s stance in the marketplace, Mao said.
“It solidifies our very attractive bond rating and attractiveness to investors,” Mao said.
This reduction in debt service brings down principal and interest payment projections to under $11 million, as opposed to previous projections which had debt service peaking at $12.5 million in 2014-15.
Mao thanked the town’s financial advisor, Mark Chapman, the underwriters, Roosevelt & Cross, and Kate Clarke Buch, the town’s finance director, for helping to refinance the bonds and reduce the town’s debt and its interest rate.
“Kudos to Kate Buch, Liz Mao and the entire Board of Finance for taking advantage of this historic opportunity,” Stevenson said.
The town’s total outstanding debt is now $91 million. Much of this money was used to pay for the new high school, Tokeneke School, the town’s police station renovation, the Goodwives sewer project, and the Mather Community Center, which is part of the Shuffle project.