Huntington was able to refinance existing bonds at a lower rate, saving taxpayers more than $275,000, when the town’s AAA stable bond rating by Standard & Poor’s and Moody’s Investors Services was recently renewed.
“The agencies’ analysis and recognition of Huntington’s fiscal practices with the AAA stable rating allowed the town to refinance outstanding bonds at a significantly lower rate,” said Supervisor Chad A. Lupinacci. “This move saved taxpayers at least $275,000 over the next six years.”
The bond sale occurred Sept. 27. The town received a total of six bids by underwriters and the winning bidder was Raymond James with a true interest rate of 2.12 percent, retiring the original bonds yielding approximately 3.7 percent. The timing of the sale was fortunate as interest rates have risen since the day the rates were locked in, he said.
In addition, the town sold $10.5 million in bonds to provide original funding for various public improvements, including at the James Conte Community Center, the Halesite Park bulkhead reconstruction, road improvements and other projects as set forth in the town’s Capital Plan. The town received seven bids and the winning bidder was UBS Financial Services. The AAA bond rating allowed the town to finance this issue at a true interest rate of 2.88 percent for 15 years. The true interest rate adjusts for inflation, making it the rate of interest after accounting for inflation (interest rate minus the inflation rate).
Standard & Poor’s and Moody’s Investors Services maintained the town’s AAA bond rating in reports issued on Sept. 21. Huntington is one of the few towns rated by both agencies.
“The stable outlook reflects S&P Global Ratings’ opinion of Huntington’s very strong economy,” the S&P Global Ratings’ report stated, citing their reasoning as to why they expect to maintain Huntington’s AAA rating for the next two years: “We believe strong management practices and policies underpin Huntington’s commitment to maintaining structural balance and strong available reserves, providing additional stability.”
Moody’s Investors Service issued Huntington’s AAA-rating, citing the town’s “improved financial position,” stating the “town’s debt burden remains below the median for similarly rated credits,” and “the town maintains a low pension liability.” The report issued a stable outlook for Huntington due to its “expectation of continued economic stability” and “projected financial stability given the town’s intent to maintain reserves at current levels.”