The MSBA Announces $916 Million Bond Refunding
October 12, 2012
BOSTON–State Treasurer Steven Grossman, Chairman of the Massachusetts School Building Authority (MSBA), and Jack McCarthy, MSBA Executive Director, announced a bond refunding to lower outstanding debt service payments on the MSBA’s Series 2005A bonds. The refunding of $916 million results in a savings of approximately $116 million for the MSBA. Since June, the MSBA has sold $1.68 billion of refunding bonds that will produce total savings of approximately $191 million over the next 18 years.
“The savings associated with these refinancings are a direct result of the investment community seeing the MSBA demonstrate a commitment to financial discipline, make responsible budgetary choices and manage school building projects in a cost-effective manner,” said Grossman. “Because of this deal, schoolchildren will benefit through more dollars flowing directly to the projects that create vibrant learning environments throughout the Commonwealth.”
The ability to refund bonds at a lower interest rate is based on favorable market conditions and on the MSBA’s ratings of AA1/AA+/AA+. The net impact of the refunded bonds reduces debt service payments and allows the MSBA to fund grants to local school districts for the construction, renovation and repair of public schools across the Commonwealth. The joint managers for the issuance were Jefferies & Company, Citibank and JP Morgan.
“We were able to once again take advantage of historically low interest rates and refinance outstanding debt that will assist the Authority with funding improvements to the teaching and learning environments for students across the Commonwealth,” Executive Director McCarthy said.
The MSBA partners with Massachusetts communities to support the design and construction of educationally-appropriate, flexible, sustainable and cost-effective public school facilities. Since its creation, the MSBA has made more than $9.1 billion in timely payments to cities, towns and regional school districts for school construction projects. These payments have saved municipalities over $2.9 billion in avoided local interest costs and have provided much needed cash flow to communities.
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