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Posted on: March 12, 2021

City of Springfield Saves Money by Refinancing to Lower Interest Rate

CITY OF (1)

SPRINGFIELD, Tenn. – The City of Springfield recently refinanced a portion of its outstanding debt to a lower interest rate in the bond market. This refinancing resulted in the interest rate on some of the city’s prior bond issues going from 3.23% to a low rate of 1.71%, producing a cumulative savings of $2,017,094 over the life of the bonds, through the final maturity of 2039.  

“This is just one example of the financial management team of the City of Springfield, in coordination with the Springfield Board of Mayor and Aldermen, seeking the best and most affordable ways to provide essential services in the city,” said Mayor Ann Schneider.

Proceeds from the city’s General Obligation Refunding Bonds, Series 2021 were used to refund the callable maturities of the city's outstanding General Obligation Refunding and Public Improvement Bonds, Series 2012, General Obligation Public Improvement Bonds, Series 2013 and General Obligation Public Improvement Bonds, Series 2014.  Estimated net present value savings are approximately 22% of refunded interest and 6% of refunded principal, with no extension of the final maturity. The city regularly seeks ways to save money through refinancing, which generates savings and frees up capital to use for other infrastructure project needs.   

The City of Springfield’s bonds are rated Aa3 by Moody’s Rating Agency, which represents bonds that are of high quality and very low credit risk.  “The Springfield Board of Mayor and Aldermen, in coordination with Director of Finance Lisa Crockett, regularly assess capital needs and then plans appropriately to address those capital maintenance and replacements needs,” said City Manager Ryan Martin.  “We like to save as much money as we can on our capital improvement projects.”  

Moody’s, in its review of the city, further referenced the bond rating “reflects the city's strong financial position with healthy reserves and liquidity.”  Ashley McAnulty, Stephens Inc.’s financial advisor to the city, highlighted the fact that the City of Springfield, one of the top-rated cities in Tennessee, does a very good job of managing its financial resources in an efficient and effective manner.  


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