Snohomish PUD to Save $11 Million with Bond Refinancing
Everett, WA – Snohomish County PUD this week issued $55.6 million of tax-exempt bonds, a move that will save its customers $11 million over the life of the bonds.
The new bonds, which mature in 2015 through 2028, were sold at an average borrowing rate of 2.73%, considerably lower than the 4.36% rate for the bonds sold in 2004 that will be retired. This will save the utility an average of $700,000 in interest costs per year. The PUD sells tax exempt bonds to finance a portion of its capital expenditures.
In conjunction with the bond sale, the PUD confirmed its bond ratings. Standard & Poors and Fitch rated the District AA-, while Moody’s provided an Aa3 rating. These were consistent with the PUD’s previous strong ratings. Strong bond ratings allow the District to sell bonds at lower rates, providing savings for the District’s ratepayers.
In their reports, the rating agencies cited several key factors, including:
The stability of the Snohomish County economy,
Strong financial practices,
A moderate debt burden,
Benefits of a long term supply agreement with the Bonneville Power Administration, and
Resource planning that allows the PUD to comply with environmental regulations and accommodate load growth and strong liquidity as some the utility’s strengths.
“Low interest rates have allowed the PUD to achieve record savings on a bond refunding, exceeding our expectations when we began the refunding process,” said PUD Assistant General Manager for Finance Glenn McPherson.
“The PUD Board of Commissioners has provided solid policy direction that will ensure continued strength for our utility,” said PUD General Manager Steve Klein. “These policies have earned outstanding ratings from the bond market, confirming that we are managing our finances in a prudent manner and keeping our cost of borrowing low.”