Bond Sale Reduces Interest Rate, Saves $2.4M Debt Service: Town

GUILFORD, CT — The town announced that earlier this week, it sold $18,015,000 in General Obligation Refunding Bonds which refinanced prior bonds originally issued in 2015 for the new high school.

With the refinancing, officials said, the town was able to reduce the interest rate on the bonds from 3.00% down to 1.27%. That reduction in interest will save Guilford in excess of $2.4 million in annual debt service over the next fourteen fiscal years, officials said in a news release.

The average debt service savings between fiscal years ending 2023 to 2036 will be $175,000 per year. When measured on a present value basis taking into account the time-value of money, the total annual savings represented 11% of the prior bonds, which far exceeds the minimum savings threshold of 3% recommended by the Government Finance Officers’ Association of America.

The Refunding Bonds were rated AAA by S&P Global ratings, which is the highest rating given to municipal bonds.

According to the Town’s municipal advisor, Munistat Services, Inc. of Madison, the town’s General Obligation debt is attractive to municipal bond investors because of Guilford's "superior bond rating and strong reputation in the municipal bond market."

During the pricing period, the town received 78 distinct orders from 20 different investors which totaled $47.9 million. The orders received on the bonds far exceeded the amount bonds being offered and equated to an over-subscription of 2.7 times. T, so the town was able to leverage the significant investor interest into a lower interest rate on the new bonds.

In addition to Munistat Services, Inc. as municipal advisor, Shipman & Goodwin LLP of Hartford as bond counsel, Raymond James & Associates of New York, New York as underwriter and Updike, Kelly and Spellacy, P.C. of Hartford as underwriter’s counsel all assisted the town in the sale.