Colonie recently received a new bond rating that decreased the town’s interest rate, a development that is projected to save nearly $200,000 in interest over the next seven years.
The town’s bond rating of A- from Standard & Poors, which was announced Monday, Dec. 16, is an improvement from the previous rating of Baa1 from Moody’s Investor Services in 2010.
“After six years of hard work on everyone’s part, we continue to improve with our finances,” said Supervisor Paula Mahan. “Our focus has been on improving our finances, and I was very pleased that S&P did a careful review and recognized all the work that we have done over the last six years.”
When Mahan took office in 2008, the town’s financial outlook had been downgraded twice the previous year to a Baa1 rating with a negative outlook. The negative outlook was lifted in 2010 on the assumption that the town would build on two consecutive years of “favorable operational and budgetary results.”
Comptroller Craig Blair said the town received its most recent bond rating through S&P to save money on insurance the federal government requires bond purchasers with a credit rating below AA to buy. Moody’s Investor Service does not provide that insurance, but S&P does.
“Were trying to save money, and this is a way to do that. We’ll probably stay with S&P for years to come,” said Blair.
At the end of the month when the bonds for the landfill become callable, the town will pay off roughly $6 million and save over $600,000 in interest, for paying off the bonds early.
Callable bonds are bonds that can be paid back by the issuer before the bond has reached maturity. When the bonds become callable you can pay them off or refund them. The blended rate decreased from 4.2 percent to 2.6 percent, saving the town money.