Meriden Bond refinancing expected to save nearly $3 million

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MERIDEN, CT — The city has refinanced its bonds, a move expected to reduce its interest costs by $2.9 million, and its bond rating has improved, according to a city statement. The $43.78 million redemption bond issue “provided significant cost savings by refinancing the bonds originally issued at higher rates.”

“This is great news for ratepayers in the City of Meriden,” City Manager Timothy Coon said in a statement. “By refinancing these bonds, we were able to take advantage of a persistently low interest rate environment. This results in significant budgetary savings for our fellow citizens.”

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

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

“Interest rates are rising and have been quite volatile over the past month with inflationary concerns and expectations that the Federal Reserve will raise rates this year,” said Matthew Spoerndle, senior managing director at Phoenix. Advisors and Councilman of Meriden, said in a statement. “Fortunately, the City was able to enter the market now before rates rose too much and resulted in savings of nearly $3 million for ratepayers. This is great news for the City!”

S&P Global’s ratings confirmed Meriden’s rating at AA, which is a step away from the highest AAA rating.

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

As a result of the rating process, S&P’s “outlook” for the city was revised from “negative” to “stable”. This was due to “the city’s improving financial trend, including three years of audited surpluses plus a projected surplus for fiscal year 2022, resulting in increased reserves and greater financial flexibility.”

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