The Kearney County Board of Supervisors approved the refinancing of the Kearney County Health Services bond from 2009 at their meeting on Tuesday, January 17.
The refinance will lock in interest rates currently sitting at all-time lows. Cody Wickham of DA Davidson explained that the bonds have a 5-year call date but can take one advance refinance.
The bonds, which paid for HVAC, boiler systems and electronic upgrades were taken out in March of 2009 meaning they won’t be called until 2014.
By refinancing, the board will pay out $1.14 million to pay off the bonds and that payment will sit until the call date and then be administered at the call date, March 31, 2014 at which time the savings were expected to be $55,000.
However, the interest rates dropped another 15 points over the previous weekend, which raised the expected savings to $70,000.
Present value savings is a metric used to measure the value of a potential refinance at a certain time by dividing anticipated savings by the number of bonds,
Any result over 3 percent is considered an advisable refinance. The hospital’s bonds are at 4.7078 percent currently, and that number was without the recent market drop.
In 2009, the projected 2012 interest rate was 2.25 percent, but rates currently sit at 1 percent, and calculating in the extra 15 points, that number may drop as low as 0.8 percent.
For more, read The Minden Courier