Bond refund could create roughly $500K for Hampton School District
A bond refunding opportunity for the Hampton Township School District could potentially create a value of an estimated half a million dollars if interest rates stay near 8 percent.
Randy Frederick of Piper Jaffray, an underwriter for the school district, presented a money-saving opportunity to the Hampton Township School Board at its April 3 public meeting, which would potentially provide a net present value savings of $505,665 for a bank qualified issue. This bond refunding represents 7.9 percent of the outstanding principal amount, according to a district report.
“It's pure interest rate savings,” said Frederick.
The school board approved a resolution at its April 17 board meeting on details to refund a Series 2006B Bond. The savings could be right around the corner, said Kline.
“It will likely occur in May … Daily market values may change our date,” said Kline.
The Series B bond in 2006 was originally issued at interest rates ranging from 3.5 to 4.25 percent, according to Frederick and Chip McCarthy, another representative at Piper Jaffray. At purchase, the final maturity date is Aug. 15, 2031.
The 2006B bonds have an optional redemption rate of Aug. 15, 2017, according to Frederick and McCarthy.
The district may opt to take the money upfront to be used toward capital projects, he said.
This opportunity came in part due to the district's well-attended financial status.
“It's easier to sell a bond with your rating. You guys have done a great job keeping your finances,” said Frederick, who is also a Hampton resident.
The letters noted with the year of the bond are just used to differentiate series of bonds issued in the same calendar year, said McCarthy and Frederick.
The district did a refunding on a 2006A issue last August, according to Kline. The net present value savings on that funding was $1.282 million and they elected to use that savings to reduce future debt, he said.
The school district's annual total debt service payments are $4.9 million, said Kline.
Natalie Beneviat is a Tribune-Review contributor.