CITY OF NEW HAVEN TAKES ADVANTAGE OF LOWER INTEREST RATES AND REFINANCES A PORTION OF ITS BOND DEBT
$16.12 million in bonds refinanced from 4.6% to 2.95% and will save $623,000 over the life of the bonds.
*The new payment structure will improve the City’s cash flow while maintaining the City’s aggressive repayment policy.
(New Haven, CT) The City of New has refinanced $16,120,000 in bonds in order to take advantage of lower interest rates that currently exist. The bonds, first issued in 2003, had an average interest rate of 4.6% and have been refinanced down to 2.95% which will save the City approximately $622,300 over the 10-year life of the bonds.
“Clearly, its financially prudent to take advantage of lower interest rates on those bonds that qualify for refinancing” said Mayor John DeStefano, Jr. “This will save the City of New Haven over half a million dollars in interest payments over the life of the bonds.”
The new bonds have payments that are structured so that reserves can be replenished in the current year. Payments will increase in 2020 and 2021—years when debt service will drop dramatically even if borrowing continues at current levels.
The City of New Haven is currently scheduled to repay 77.398% or of its bonds within 10 years, a far higher and more aggressive repayment rate than the industry standard of 50%. With the different repayment structure of the $16,120,000 in newly refinanced bonds, New Haven will pay off 77.375% of its debt within 10 years.
“Without altering the city’s practice of aggressive repayment of debt, this refinancing allows significantly improved cash flows and overall savings,” said the Mayor. “It is a prudent decision that balances financial responsibility with the current economic climate to the advantage of the City of New Haven in both the short and long term.”