Bond refinancing to save millions Low rates also benefit new county issue

March 08, 1993|By James M. Coram | James M. Coram,Staff Writer

Dazzled by low interest rates in the municipal bond market, Howard County is rushing to put together a $150 million bond sale, the largest in county history.

The county had planned to sell $54 million in bonds later this month, but with interest rates expected to be at 5.2 percent to 5.4 percent or lower, county officials also decided to refinance $96 million of bonds.

Included in the $96 million are bonds refinanced in 1986 and bonds issued as recently as 1991. Other issues date from the early 1970s.

Depending on the interest rate, the bond sale could add $1.5 million to $3 million to the county treasury for fiscal 1994, said Raymond S. Wacks, the county budget administrator. The savings would be split between the county's general fund and the Metropolitan District Fund for water and sewer.

The county would be able to realize a windfall for the fiscal year that begins July 1 and still keep debt service at a level no higher than the county is paying now, Mr. Wacks said.

The bond sale will be handled by the same Wall Street broker that handled the county's 1991 refinancing, Mr. Wacks said. "We were very happy with their performance and see no reason to change players," he said. "We are confident they are the best team for Howard County."

As in 1991, the interest rate will be negotiated rather than established through competitive bids.

While reviewing its plans for a $54 million bond sale to cover bond anticipation notes issued two years ago, the county found the rates so advantageous that it decided on the refinancing as well, Mr. Wacks said.

"It's a good time for homeowners to refinance their mortgage, and it's a good time for the county to refinance," Mr. Wacks said.

Because of the volatility of the bond market, the county must act quickly to achieve the savings, Mr. Wacks said. "Every day we postpone the sale, we loose $3,000 in interest earnings," he said.

To speed things along, the County Council will hold an emergency session at 7 p.m. tomorrow for the sole purpose of introducing legislation authorizing the bond sale.

The council will hold a public hearing on the bill March 22 and is expected to approve the legislation immediately afterward. The negotiated sale would occur the following day.

The council will meet again March 25 to ratify the agreement.

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