MIDDLETOWN >> The Middletown Unified School District successfully refinanced some of its outstanding general obligation bonds, availing itself of historically low interest rates in the school bond market. The refinancing will save local taxpayers approximately $800,000 in interest over time, and these savings will be realized in the form of lower property tax bills.
Given the events of the recent months, this is good news for all property owners in Middletown.
“The Board of Trustees and District Staff greatly value the strong support we receive from our community and we are very pleased to complete this refinancing and secure a substantial amount of savings for our local taxpayers,” said Bill Wright, President of the Board.
The original bonds, issued in 2008, carried an interest rate of 5.50 percent; the refinancing bonds issued to pay off the original bonds carry an interest rate of just below 4 percent. In addition, this transaction was priced prior to the Federal Reserve’s recent rate increase, to eliminate any impact of the announcement on the interest cost.
Similar to the refinancing of a home mortgage, these savings are generated by locking in interest rates that are lower than the original interest rates, thereby lowering the amount of payments required over time to pay off the bonds.
The rating agency of Standard and Poor’s assigned a credit rating of A+ to the District based on the strengths of the District presented by staff to rating analysts. This high rating, combined with the prevailing low interest rate environment, enabled the District to maximize savings.
