Standard & Poors reaffirmed its high rating for the City of Bristol, a factor that recently helped the city achieve savings on future debt costs.
On Thursday, Nov. 2, the city issued $25.4 million in refunding bonds to refinance the outstanding maturities of the City’s 2011 General Obligation bond issue. A press release from the city said Bristol was able to reduce the average interest from a 3.70% to 2.25% which resulted in a savings of $1.4 million.
The refunding was structured with the majority of the savings in the early years with just over $1 million in savings realized for fiscal year 2019 when debt service costs were scheduled to increase approximately $1 million, said the news release. With the exception of issuing any new debt this refunding will help the city achieve level debt service costs over the next couple of years.
“In short, the savings mean we don’t have to raise the city’s budget to cover the increase in debt service costs next year or reduce our services to maintain the existing budget,” said Bristol Mayor Ken Cockayne in a press release last week.
“Similar to refinancing a home mortgage, any opportunity to capitalize on a low interest rate environment to refinance debt is a good thing and this really paid off for the City”, said Diane Waldron, comptroller, in the city press release. “This financing was well timed and the market cooperated and as a result the city was able to take advantage of the low interest rate environment to secure savings in the future.”
“In spite of the significant fiscal struggles of the State of Connecticut, S&P continues to recognize the work the city’s management has done to maintain strong fiscal health, and as a result, the City was able to refinance debt resulting in significant savings to the taxpayers of Bristol” said Matthew Spoerndle, senior managing director of Phoenix Advisors and Bristol’s financial advisor, according to the press release. “The results of the refinancing were exceptional.”
Chairwoman of the Board of Finance Cheryl Thibeault added, according to the press release, “This is the tangible result of having a strong bond rating. Fiscal responsibility matters. It is nice to reap the benefits for our tax payers.”