Mayor Ben Blake announced that in addition to the $1.4 million in refunding savings from just one month ago, the City will capture ANOTHER $1.4 MILLION ($1.4M + $1.4M = $2.8M TAXPAYER SAVINGS) by refinancing decade-old loans the City has with the State of Connecticut under the Clean Water Fund (CWF) program.
The State of Connecticut’s 2% CWF loans were made with Milford 10-14 years ago to improve local sewer treatment facilities. The 2% loan had historically been a better option than issuing bonds in the capital markets. With interest rates for municipal bonds at record low levels and subscriber demand for Milford’s AAA bonds at an all-time high, the City was able to lock-in another $1.44 million in debt service savings by refinancing.
This is the first time interest rates on bonds in the capital markets are significantly less than the State’s 2% program. As a result, numerous issuers are looking to take advantage of the fiscal environment by refinancing State loans - Milford is one of the first.
The City received a total of eleven bids with interest rates ranging from a winning bid of 0.33% to a high bid of 0.49%. The sale was extraordinarily competitive with all bids within 16 basis points (0.16%) and the winner narrowly edging out the second place bid by a mere 0.01%.
“I’ve been doing this for over 20 years,” said Matthew Spoerndle, senior managing director of Phoenix Advisors and Milford’s municipal advisor. “I can honestly say that I never thought that interest rates would go low enough to be able to refinance those CWF loans for this level of savings, and yet, here we are. Talk about good timing! It’s another outstanding result for the City of Milford!”
“I am very pleased with these results and how well the refundings were structured. This is great news for the City,” said Peter Erodici, Director of Finance.
The historic bond refunding comes on the heels of a financial rating review wherein the nation’s premier rating agency, Fitch, reaffirmed Milford’s AAA bond rating, the highest possible credit grade a city can receive.