Officials hail debt refinancing that saves town $3.8M
Westport has capitalized on its top Aaa credit rating and low interest rates to sell $29.3 million in "re-funding" bonds Tuesday, retiring debt on bonds issued in 2003 and ensuring annual budget savings between $420,000 and $425,000 from 2014 to 2022, according to First Selectman Gordon Joseloff.
Based on the Aaa bond status from Moody's Investor Service, Westport was able to trim an overall $3.8 million from future debt-service as a result of the debt refinancing. That was possible because the new bonds yield an average total interest of 1.07 percent, compared to an average interest rate of 4.9 percent on the retired bonds. The transaction saves 12 percent of the value of the bonds' principal.
"When the opportunity comes along to re-fund almost $30 million worth of debt, and it does it over eight years, and save between $420,000 and $425,000 a year, that's pretty good," Joseloff said. "Every dollar counts in municipal finance, and we watch over our dollars very carefully."
The town's outstanding debt is now $134,649,530.
Matthew Spoerndle of Phoenix Advisors LLC in Milford, who advises the town on financial matters, said the town took advantage of its wealth and loan rating to sell new bonds to refinance debt owed on older, higher interest bonds.
"Town leaders know the value of going back to the market if conditions are favorable," Spoerndle said. "We worked with Westport on last year's re-funding to save taxpayers $1.3 million, and we are pleased that this year's savings are even greater."