The Schenectady County Metroplex Development Authority wants to refinance $22 million worth of bonds in an effort to save about $155,000 a year.
The bonds were issued in 2005 and 2006 to finance a series of Metroplex projects. The board voted Wednesday night to refinance them, hoping to achieve savings before the Federal Reserve raises interest rates this year.
“We decided to go to market because interest rates are very, very low right now,” said Metroplex Chairman Ray Gillen. “Everybody is doing this.”
Interest rates have been at historic lows but probably won’t be for much longer. Federal Reserve Chairwoman Janet Yellen continues to hold out on raising rates, but financial markets expect that to change any day now as the economy continues to show signs of improvement.
Moody’s Investors Service affirmed an A1 rating on the Metroplex bonds Wednesday, which indicates low credit risk.
“The A1 rating reflects stable growth of the county’s taxable sales, its strengthening economy and satisfactory legal protections for the bonds, as well as coverage levels that are adequate but below-average for the rating category,” Moody’s wrote in its rationale. “The rating also incorporates the expectation that debt service coverage levels will decline from their recent high, due to increased debt service requirements through 2016.”
Metroplex expects to sell the bonds on May 6, and will use the proceeds to refinance the bonds for an anticipated $2.2 million savings over the life of the bonds.
“That’s money we can put into facade projects and other work,” said board member Bill Chapman after the board vote Wednesday. “It’s just like refinancing your house. You get those savings that you can put to use elsewhere. It’s good to know we’ll be making a substantial savings here.”
Metroplex issued $17.47 million in general obligation bonds last year. As of Dec. 31, 2014, it had $55.47 million in outstanding bonds with principal payments of $2.59 million expected on them this year.