When it comes to selling bonds, getting good grades certainly pays off.
Standard & Poor’s recently rated the city of Hermiston’s Full Faith and Credit Bonds as A+. Assistant City Manager Mark Morgan said the city of Hermiston is now set to save $600,621 over the next 20 years by refinancing bonds originally issued in 2003.
The original bonds carried an interest rate of 4 percent, escalating to 4.65 percent. The bonds, which still have 20 years until maturity, now carry a net interest rate of 2.81 percent. The reduced interest rate means the city will pay $600,621 less than it otherwise would have under the old rates over the life of the bonds, said Morgan. The annual savings to taxpayers then comes out to an average of approximately $30,000 per year.
Morgan said the savings, when adjusted for “present value,” or what the total savings equate to in 2013 dollars, come out to $465,016. The full refinancing report can be viewed on the city’s website.