ST. JOHN | Town taxpayers will benefit from last week’s refinancing of two building corporation bonds totaling $7.3 million with lower interest rates.
Mesirow Financial of Chicago, St. John’s official underwriter, handled reissuing the new bonds for a total interest savings of $547,270, Town Manager Steve Kil said Friday following the morning sale.
Originally issued by the town in 2005 and 2006, the building corporation bonds financed construction of the St. John Municipal Center, police and fire stations and public works building.
The repayment of the building corporation bonds, with interest, comes from property taxes.
Town Council members authorized an immediate “sell order” Thursday, allowing Mesirow Financial to take the new bonds to market at lower interest rates than the original bonds.
Kil said the sale should be closed in mid-September.
Municipalities find they can save money on interest payments by refinancing the bonds they’ve sold in the past, much as a homeowner would refinance a mortgage. That occurs when interest rates on the refunded bonds is lower than the original rates.
This is the second time since April that the council approved refinancing the building corporation bonds.
Part of the problem then was the bond market’s reaction to Federal Reserve Chairman Ben Bernanke’s announcement that low interest bond buying by the U.S. government would be scaled back later this year if economic reports continued to show improvement.
At the July 1 meeting, the council opted to hold off refinancing the bonds until interest rates came down again.