Published Tuesday, September 17, 2002
on falling rates
Herald Staff Writer
Sharon school directors Monday gave the unofficial go-ahead to refinance two bond issues that could save the district more than $440,000 in the next 17 years.
Business Manager James Wolf said he got a call Friday from RBC Dain Rauscher, Pittsburgh, the company that handles the district's bond refinancing. Wolf said he learned interest rates have dropped drastically in the last few weeks, and refinancing the 1998 and 1999 bond issues will save $440,630 through 2019.
The interest rate for the 1998 bond fluctuated between 4.2 percent and 5 percent; the rate for the 1999 bond fluctuated between 4.25 percent and 5.125 percent. The new, locked-in interest rates for the 1998 and 1999 bonds are 4.83 percent and 3.23 percent, respectively.
Mike McKay, a representative from Dain Rauscher, asked the board for permission to start the preliminary work necessary to lock in the low interest rates before they change.
"It's a very volatile market right now," McKay said. "It (the current interest rate) can disappear as quickly as it appeared."
"If it's going to save us money, go ahead," said Board President the Rev. Lora Adams-King.
The 1998 bond issue was $8,360,000 and the 1999 bond issue was $8,825,000.
A bond issue is a long-term loan. Investors buy the bonds on the open market and school districts and municipalities repay them with interest.
Over the term of the bonds the district will see savings each year ranging from as high as $37,759 to as low as $13,782 in the last year, according to a financial analysis prepared by Dain Rauscher.
Wolf added that there's no risk or cost to the district to start the process. McKay said his firm only gets paid upon successful completion of the refinancing.
You can e-mail Herald Staff Writer Kristen Garrett at kgarrett@sharonherald.com