The planets must have been aligned at just the right time. Lake Orion School District officials announced last week that a bond refinancing plan will save the district over $10.8 million.
Brenda Palmer, of AG Edwards told school board members on Feb. 9, ‘This hit the market at the most opportune time.?
AG Edwards is an underwriter for the district and has been working on a refinancing plan since last October.
Lake Orion will be able to lower its debt payment over $600,000 a year.
‘This is the biggest savings I’ve ever seen,? Palmer said.
The percentage of the debt savings to the school district is 10.55 percent. The industry standard for refinancing is about 3 percent.
The school district’s bonds have a AAA rating in the state of Michigan. Moody’s Investors Service has recently upgraded the district’s rating from A-2 to A-1.
Moodys is among the world’s most respected and widely utilized source for credit ratings. These credit ratings help the investor analyze the credit risk.
Financial consultant Paul Stauder of Stauder & Barch told board members ‘he was amazed at what’s happened in the market in the last couple of weeks.?
‘They’re not giving a lot of upgrades these days,? he added.
Stauder believes one of the reasons Lake Orion is rated so high is because of its sizeable tax base. ‘And you’re handling your finances well in this current climate,? he said.
According to Stauder, because of this big savings, the school district will probably have to borrow less from the state to pay on some of its bond debt obligations. ?(Because of this), you could possibly save another million),? he added.
Lake Orion School District’s Financial Director Jillynn Keppler was pleased with the upgrade in the district’s rating. ‘When seeking bonds, we can ask for a better interest rate and sell to a wider population,? she said.
‘We’re very pleased to do this for the community. They’ve supported us by passing bond issues. It’s great we can give something back to them.?