www.co.worcester.md.us

Interest rate and bond premium saves Worcester County Government $5.98 million on bonds

Worcester County Government (WCG) recently obtained a 2.35% effective interest rate from Fidelity Capital Markets for the Consolidated Public Improvement Bond 2019 Series to build a new Showell Elementary School and a new athletic field and track at Stephen Decatur High School, to complete construction of Cell 5 at the Central Landfill, and to complete various water and wastewater improvements in the Ocean Pines and Riddle Farm Service Areas.

“As a result of our finance team’s adherence to a tried and proven conservative fiscal policy and through their continued hard work, we were able to realize substantial savings,” Chief Administrative Officer Harold Higgins said.
This is an outstanding interest rate that is well below budget estimates and will result in savings of more than $5.98 million over the life of issue, with approximately $370,000 to be saved in FY2020 alone. 
The winning bid by Fidelity Capital Markets also included a premium of $6.6 million that will be used to reduce the total amount borrowed. As a result, WCG will receive proceeds of $46 million for the needed planned capital projects, while only being required to pay back $39.8 million. 

“This is truly a win-win situation for the taxpayers and ratepayers who get the benefit of an up-front debt reduction combined with an exceptional interest rate over the 15-year term,” Finance Officer Phil Thompson said.
The bond sale followed rating agency meetings with Fitch Ratings, Standard and Poor’s, and Moody’s Investor Services earlier this year. 

“The agencies carefully examined WCG’s current financial standing, paying close attention to the tax base, recent economic trend data, financial reports, as well as our fixed costs (including debt) and financial policies,” Thompson said. 
The meetings resulted in all three agencies assigning a stable outlook to WCG and affirming the current rating of AA for Fitch, AA+ for Standard and Poor’s, and Aa2 for Moody’s Investor Services. 

“These ratings clearly indicate that WCG continues to make prudent financial decisions, and the markets have rewarded WCG for its sound financial management,” Thompson said. “The relationship and cooperation between our leadership, the staff, and our community is something to be very proud of.”

WCG’s financial team continues to apply sound, conservative financial policies to maintain its fiscal health and a stable bond rating, which enables WCG to borrow money at a low interest rate, thus saving residents and taxpayers hundreds of thousands of dollars.