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Pawtucket - Pawtucket Mayor Donald R. Grebien and Pawtucket Water Supply Board (PWSB) Chair William Masuck announced today that the City has sold its $24,265,000 Water System Refunding Revenue Bonds to the Rhode Island Infrastructure Bank on behalf of the PWSB at interest rates lower than projected, saving $9.8 million in future debt service.
“The City and the Pawtucket Water Supply Board are very pleased with the results,” said Mayor Grebien of the announcement. “We worked with the Rhode Island Infrastructure Bank, who issued bonds in the public market, to save our ratepayers a significant amount of money. Our initial projections showed savings in the millions of dollars, but $9.8 million exceeded our expectations,” stated Grebien. “I commend the Pawtucket Water Supply Board and the Rhode Island Infrastructure Bank on a successful sale that benefits the people of Pawtucket,” continued Grebien. The bonds were underwritten by TD Securities. Nixon Peabody was bond counsel to the Rhode Island Infrastructure Bank and Locke Lord served as bond counsel to the City and the Pawtucket Water Supply Board. FirstSouthwest was the financial advisor on the transaction.
Maureen Gurghigian of FirstSouthwest, the financial advisor said, “The refunded bonds had an average coupon of 5.28% while the new bonds have a net interest cost of 3.84% with maturities ranging from 2025 through 2035. The City did not extend the final maturity and all of the savings are due to a reduction in interest rates.”
“The lower-than-anticipated rates were due to a favorable market, the underlying “A” rating of the Pawtucket Water Supply Board, and the use of bond insurance,” said Mayor Grebien. “An analysis by the financial team showed that by using National Public Finance Guarantee for bond insurance, we were able to save even more. Overall, we are saving $400,000 to $500,000 in debt service each year for the next 20 years. That’s something we should all be proud of,” continued Grebien. Jim DeCelles, Chief Engineer of the PWSB said “the more than $400,000 in annual debt service savings will help provide rate stabilization to our ratepayers.”
- Mayor Donald R. Grebien