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Tompkins County has achieved a very favorable interest rate in its sale of nearly $9 million in Serial Bonds, refunding of 2004 debt that will save the County more than $700,000 in total—more than $100,000 each year over its term.

Noting favorable conditions in the municipal bond market, County Finance Director Rick Snyder announces that the County, with a bond rating of Aa1 (stable), sold $8,935,000 of Public Improvement Refunding (Serial) Bonds November 5, at a net interest rate of 1.268%.  The term of the bonds is seven years (or until February 15, 2020) and does not increase the term of the existing bonds.

The County achieved savings of $734,212 over the life of the issue, which saves the County approximately $105,000 every fiscal year.

“We work hard for about 90 days on restructuring a deal like this, but you never know if you are going to hit the market at a good time or not,” says Director Snyder.  “In this case, we definitely did.  I am well-pleased with the results.”

The magnitude of the savings is greater than the County had projected.  “The net present value savings of the refunding is 7.52%. The County typically uses a threshold of 3% in PV Savings before proceeding with a refunding,” Mr. Snyder notes. “When we analyzed the refunding last month, we estimated savings of $552,199 and a net present value savings of 5.53%.  When an analysis was done in September, the savings was estimated at $536,011 with a net present value savings of 5.36%. So, timing is everything—we were very fortunate to enter the market at this point in time.”

Results compare to the County’s last bond issue in June, when it sold bonds at a net interest rate of 3.399%.

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