York Suburban board hears refinancing plan that could save roughly $323,000
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Summary
Raymond James presented a plan to refund roughly $9.47 million of 2019 bonds, estimating net cash-flow savings around $323,000 and recommending a parameters resolution to allow the district to proceed if market conditions hold.
Laurent Stadel, a Raymond James adviser, told the York Suburban School District board the district could call about $9,470,000 of outstanding 2019 principal and issue just under $9,000,000 in new debt to refinance that tranche.
"We would be calling approximately 9,470,000.00 of outstanding principal and issuing just under 9,000,000 to refund those bonds," Stadel said, describing an illustrative new yield near 2.59 percent and a projected net cash-flow savings of about $323,000, net of issuance costs.
Why it matters: the district's plan-con subsidy for certain past projects reduces net debt service now but will end when bonds pay off; refinancing the 2019 bonds could lower the district's annual debt-service burden over the medium term and create capacity for future capital borrowings.
Stadel walked the board through mechanics and cautioned that the refunding is interest-rate sensitive. She said the estimated cost of issuance for the transaction would be about $163,000 and that local advertising and filing fees with the Department of Community and Economic Development would likely add roughly $1,500'$2,000.
Board members focused questions on the possible erosion of savings if market yields rise. Stadel told the board a 25-basis-point increase would cut the estimate to about $242,000; conversely a 25-basis-point fall could increase savings toward $400,000.
Next steps: Stadel recommended the board consider a parameters resolution at the board's meeting in two weeks to authorize the financing team to prepare offering documents and file with state regulators while retaining discretion to move forward only if market conditions meet the district's objectives. No parameters resolution was voted on at the meeting; the board agreed to consider the resolution at the next meeting.
The presentation and discussion did not change any current debt service obligations; no refunding would occur unless the board adopts the parameters resolution and market conditions support issuance.