Bond refinancing means easy money for county
Becker County will save about $192,000 by refinancing bonds it issued in 2007 for a courthouse addition project.
"You can issue a 15-year bond at a true issuance rate of 2 percent -- it's just an indication of how low bonds are now," said J. Bruce Kimmel, a senior financial advisor with Ehlers of Roseville, which is handling the bond refinancing for the county.
Kimmel appeared at the County Board meeting Tuesday.
By refinancing, the county will save about $15,000 a year over the 15-year life of the $5.5 million general obligation bond issuance.
The bonds will have a 10-year "call date," at which time the county can essentially choose to pay them off early.
The county is now paying interest rates ranging from 4 percent to 4.25 percent on the 2007 courthouse bonds.
The new interest rates are expected to range from .4 percent to 2.5 percent, Kimmel said.
The county has an AA2 rating from Moody's Investor Services, and Ehlers expects a similar or higher AA rating from Moody's or Standard and Poor's for the bond refinancing.
"We recommend Standard and Poor's," Kimmel said. "Their methodology takes into account the strength of greater Minnesota counties better than the methodology used by Moody's."
The bond sale will take place June 12. The time lag is required by state law to give any opponents of the proposal time to launch a reverse referendum process to halt the sale.
Kimmel doesn't expect opposition, since "the only thing you're doing here is lowering the interest rate to lower the taxpayer burden -- I think such a referendum is highly unlikely."
Becker County has plenty of room for more borrowing if the need rises: With the refinancing, it will have used just $5.5 million of its $133 million legal debt limit.