Meriden Bond Refinancing Expected To Save Close To $3 Million

MERIDEN, CT — The city has refinanced bonds, a move which is expected to lower its interest rate costs of $2.9 million, and its bond rating has improved, according to a statement from the city. The $43.78 million refunding bond issue "yielded significant savings as a result of refinancing bonds originally issued at higher rates."

“This is excellent news for the taxpayers of the City of Meriden,” City Manager Timothy Coon said in a statement. “By refinancing these bonds, we were able to take advantage of a still-low interest rate environment. The result is significant budgetary savings for our citizens.”

The bonds will refinance previous ones originally issued in 2014. Those bonds have reached their “call date”, or the date at which the city can refinance those bonds on a tax-exempt basis.

Those bonds were originally used to fund various school, sewer, and public improvement projects. Additionally, the city was able to refinance a 2011 Clean Water Fund loan with the State of Connecticut.

“Interest rates are rising and have been quite volatile over the last month with inflationary concerns and expectations that the Federal Reserve is going to raise rates over this course of this year,” Matthew Spoerndle, senior managing director of Phoenix Advisors and Meriden’s municipal advisor, said in a statement. “Fortunately, the City was able to enter the market now before rates move too much higher and lock in close to $3 million in taxpayer savings. This is great news for the City!”

S&P Global ratings affirmed Meriden’s rating at AA, which is two steps away from the highest AAA rating.

In a report, bond rating firm S&P referenced the city’s “strong management…supported by formalized financial policies and practices” while also noting its “improved financial performance” and a “diverse employment base” as credit strengths.

As a result of the rating process, the City’s “outlook” from S&P was revised from “negative” to “stable”. This was as a result of “the city's improved financial trend, including three years of audited surpluses plus an expected surplus in fiscal 2022, resulting in increased reserves and greater financial flexibility.”