The Winchester Municipal Utilities Commission expects to save $1.5 million over the next 20 years by refinancing a 2002 bond.
Thanks to an A rating from Standard and Poor’s Rating Service and lower interest rates, WMU will retire the original bond with a traditional bank loan, and pay back the remaining balance at a much lower interest rate.
Because of the utility’s good credit rating and improved financial situation, WMU was able to sell the bond to Southwest Securities with an interest rate of 3.2 percent. Five financial institutions presented bids, with Southwest Securities providing the lowest.
The utility’s last credit rating — from Moody’s in 2009 — was an A with a negative outlook, because of large projects planned, including the new wastewater treatment plant.
WMU elected to deal with a bank for financing, rather than the Kentucky League of Cities bond pool, in an effort to save money. In March, financial analyst Chris Bowling said the move would save the utility an estimated $500,000.
The loan terms were not extended, and WMU expects to retire the debt in 2033.
Contact Rachel Parsons at firstname.lastname@example.org, or follow her on Twitter, @ParsonsRachel.