The Alabama Public School and College Authority last week saved more than $26 million refinancing $90.9 million of outstanding capital improvement pool bonds and $90.6 million of economic development and training bonds.
“Due to a very favorable interest rate environment and solid credit ratings … the bonds sold on a competitive basis and well inside initial expectations with average true-interest cost of 1.65% for the capital improvement pool bonds and 2.09% for the economic development and training bonds,” state officials said.
The PSCA bonds were rated AA-plus by Fitch Ratings, Aa1 by Moody’s Investors Service and AA by Standard & Poor’s. Goldman Sachs & Co. and Bank of America Merrill Lynch were the winning bidders.
The deal was sold for debt service savings within existing maturities. The capital improvement bonds obtained present-value rate savings of $11 million, or 12.1%. The economic development refinancing resulted in present-value savings of $14.3 million, or 15.7%.
“These sale results are unprecedented, with some of the lowest interest rates in the history of the state of Alabama,” said state finance director Marquita Davis. “During this difficult budget climate, we’re searching high and low for savings that will provide some relief to our school systems and the education trust fund.”
Moody’s had cautioned that the authority’s challenges included “potential economic or other exposure to Jefferson County.” However, the PSCA’s financial adviser, Phil Dotts with Public FA Inc., said the state has no exposure to the financial problems of the county, which filed for bankruptcy in November.