Brighton School Board Votes To Refinance Bonds
April 1, 2021
By Tom Tolen / firstname.lastname@example.org
The Brighton Board of Education has voted to refinance several million dollars in bonds from the 2012 school bond issue in order to save substantial interest costs.
At a recent meeting, the board unanimously moved to refinance $8.3 million in general obligation bonds to take advantage of the prevailing low-interest rates. The action is expected to save district taxpayers about $300,000 in interest costs over the term of the bonds. Brighton Assistant Supt. for Business & Finance Michael Engelter says the district already refinanced a large portion of the 2012 bond issue last June, getting an interest rate varying from 1.02% to 2.84%, depending on the series - a gross saving of $5.39 million in interest over the life of the bonds.
However, other portions of the bond issue are not available for refinancing, either because they are “uncallable” or their call date remains too far off to make such a transaction feasible. Callable bonds are those that can be redeemed, or paid off, by the issuer before their maturity date.
The Brighton Area Schools’ bond rating continues to improve, and - according to Moody’s Investors Service - is currently Aa1, which is considered excellent. The only higher bond rating possible by Moody’s - considered, along with Standard & Poor’s, as the top bond rating service - is AAA.
The bonds are expected to go on the market in late April and, considering Brighton’s outstanding bond rating, Engelter says he foresees no problems in scoring a quick sale with waiting investors. The average interest rate Brighton is now paying on the bonds in question is 4.4%, and Engelter hopes to replace them with new bonds at roughly 1.2% interest if market conditions remain favorable.