Carbon County will see a savings of over $700,000 over the next 17 years.
During the county commissioners' meeting on Thursday, Commissioner William O'Gurek, chairman, announced that an action the board voted unanimously in favor of, which was an ordinance regarding refinancing $7.67 million, will save the county and its taxpayers a total of $703,552 over the life of the refinanced bonds. The bonds are scheduled to run through 2028.
O'Gurek introduced members of the financial team that helped with the refinancing process. They included Jay Wenger, managing director of the Susquehanna Group Advisors, Inc. of Harrisburg; attorney Peter T. Edelman of Stevens and Lee of Reading; and Henry J. Sallusti, managing director of RBC Capital Markets Corp. of Scranton.
Wenger explained that Carbon County has been assigned an underlying rating of A-plus.
"That's a very good thing," he said. "For a county of this size, (Carbon County is a sixth-class county), to receive an A-plus rating is pretty much as good as you can do. You should feel very good."
He noted that the new bond series will be insured by Assured Guaranty Municipal Insurance, a leading provider of financial guarantee insurance.
Wenger added that how the county will see the savings is through the lower interest rates that the team was able to secure for the bonds.
For the series A bonds, the new interest rate will be 3.24 percent; while for the taxable Series B bonds will be 2.47 percent. These are significantly lower than the initial rates that ranged between 3.8 and 6.48 percent for each of the bonds.
Wenger said that because the county locked in at these rates, officials can expect to see a 10 percent savings of the bonds; which is significantly higher than the normal amounts.
"Generally in the marketplace, if you could save 3 percent or more, that is considered a good transaction," Wenger said. "To get a 10 percent savings, that's a meaningful savings."
Edelman added that the county was able to get better rates because of a number of factors, including the county's underlying rating and the current bond rates.
"Fortunately, things really worked out in favor of the county, which enabled you to lock into greater savings," he said. "It was good timing."
The pair then turned it over to Sallusti, the underwriter for the bonds.
Sallusti said Carbon County's bonds were well received with the investors.
The refinancing of the bonds will take effect on Dec. 7. Until then, the financial team, which also includes Jeffrey S. Weiss, director of Susquehanna Group Advisors Inc., will prepare the final legal documents for the refinancing proceedings.
The county initially began looking at refinancing its debt in September, after the Susquehanna Group Advisors notified the board that it could expect to save significantly on refinancing because treasury rates were the lowest that have been seen in over 60 years.