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County refinances debt, saving nearly $10 million on existing bonds

Taking advantage of recent stock market declines that have strengthened the bond market, Montgomery County on Tuesday approved a refunding deal on its debt that will save the county $9.76 million over the life of the existing bonds.

The market timing also saved the county an additional $17 million on interest charges on its $60 million road bond issue compared with initial estimates.

“Acting on the recommendations of our financial advisers, we have found ourselves in a unique position to save our taxpayers $9.76 million in interest charges on debt that had been previously issued by Montgomery County,” said County Judge Craig Doyal.

“This is in keeping with our pledge to conservatively manage this road bond project and our debt to be accountable to our taxpayers and protect their interests, keeping costs as low as possible.”

John Robuck, the county’s financial adviser with BOSC, Inc., told Commissioners Court Tuesday that it was an excellent time for the county to refinance its bonds. The firm prepared an outline of savings to be realized from the refinancing and the timing of the bond sale.

“I’m sure you’ve noticed watching the stock market that there has been a flight to quality as investors have moved their money from the stock market to the bond market,” Robuck told commissioners.

“The (interest) rate is now at 3.45….that is about 20 basis points below where it was about it was when we came out here a couple of weeks ago; … to put it in perspective, we are only 18 basis points, or 0.18 percent, above historic lows. So we are in a great position to sell bonds for the county.”

In addition to the refinancing, by selling now rather than having attempted to go to market in December, the county was able to take advantage of the movement in the stock and bond markets, saving additional money for taxpayers.

Below are the actual results of the refinancing:

  • $60 million road bond program; based on the current lower interest rates, the county was able to reduce the interest cost on the bonds by approximately $17 million compared to the original bond program estimates last year. 
  • $65.2 million in refinancing of current debt; based on current rates, the county was able to refinance those outstanding bonds reduce the interest rate from 5.011% down to 3.042%, generating $9.76 million in savings for the county.

 

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  1. DollyHorton

    So does that mean the county will come up with something else they want to build that will cost 10 million to take the place of the 10 million they’re ‘saving’ and then use that to crow about how wonderful the rampant, uncontrolled growth of east county is? I think so! I predict someone will come up with a brilliant way to spend the 10 million in savings.

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