Electric bond refinancing saves city $1 million
‘A very successful sale’ noted by financial consultant
The refinancing of a Webster City municipal electric utility bond has saved nearly $1 million.
Paul Donna, of the financial firm R.W. Baird, told the City Council that Monday’s refinancing action was ”a very successful sale.”
”We did exceed the expectations we put forth a few weeks back,” he said.
In 2012, $14,915,000 was borrowed to pay for upgrades to the municipal electric utility. That bond issue had an interest rate of 5.62 percent, according to Donna.
The city government has been making the debt payments and is then reimbursed by Corn Belt Power Cooperative, which supplies the electricity to the municipal utility.
On Monday morning, R.W. Baird, on behalf of the city, entered the bond markets to refinance that debt.
The result, according to Donna, is a new interest rate of 3.83 percent.
He said that new, lower interest rate will produce a savings of about $999,000.
Donna said a variety of banks and businesses bought the new bonds. WCF Financial Bank, of Webster City, was one of them, he said.
He said the rating agency Standard & Poor’s has given Webster City a credit rating of A- for its revenue bonds like the one that was refinanced Monday.
Mayor John Hawkins described the refinancing as ”well worth the exercise.”