OWASA refinances outstanding debt to secure low interest rates

May 2, 2018 - Yesterday, OWASA refunded $20 million of variable rate revenue bonds with fixed rate bonds to take advantage of current market conditions and lock-in favorable interest rates for the duration of the loan repayment.

OWASA issued the original variable rate bonds in 2004. The interest rate on variable rate bonds rises and falls as the market changes. For most of the 14 years these bonds were outstanding, interest rates were at historic lows, saving the organization an estimated $9 million compared to what fixed rate bonds would have cost.

"We watch the market to make sure that we are making the most of our rate payers' funds," said Stephen Winters, OWASA's Director of Finance and Customer Service. "The OWASA Board of Directors agreed that this was the right move to make to keep our borrowing costs as low as possible."

By doing so, OWASA was able to mitigate against the risk of potentially rising interest rates as well as other risks associated with variable rate instruments. The fixed rate bonds have a true interest cost of 2.54% and mature over the next 11 years.

Last month, Standard & Poors raised their credit rating of OWASA from AA+ to AAA. OWASA remains rated AA+ and Aa1 by Fitch Ratings and Moody's Investors Service, respectively. OWASA's high credit score helps to keep borrowing cost low for the utility and community it serves.

For more information, please contact:

Stephen Winters, Director of Finance and Customer Service, (919) 547-4230, swinters@owasa.org