A-plus! Sumner refinances bonds, gets rating upgrade

A decision to refinance two of the city’s outstanding bonds will lead to a savings to the city and an upgrade to the city’s obligation debt bond rating from A to A+.

The decision to refinance at a lower interest rate two outstanding bonds totaling $4.7 million should save the city about $225,000 over the next 10 years.

General obligation debt is money borrowed for capital projects, secured by the city’s general tax revenues. The two bonds being refinanced are the 1998 golf course bond and the 1999 “B” bond issued to remodel city hall.

As a result of the refinancing, Standard and Poor’s has upgraded the city’s bond rating. According to a press release, it is reflection of the city’s credit history, the growth potential of the local economy, existing debt structure, the city’s financial condition and the management practices in the city.

The improved rating will help the city reduce the cost of borrowing money, including bond insurance, and the interest rate.

“This bond upgrade recognizes the work that everyone does to continue to raise the bar in Sumner,” Mayor Dave Enslow said in a press release. “It is excellent to see that in this economy, Sumner can receive such an upgrade.”

The city also plans to refinance a third bond this summer. The refinancing of the third bond, issued for utility improvements, would bring the total saving to the city to $455,000 over 10 years.

Bond Consultant Lindsay Sovde of Seattle-Northwest Securities Corporation praised the city for its management practices and told the council the city’s rating was “something to be proud of” and was “very strong,” especially for a city of its size.

“For a city of your size, your debt levels are very moderate,” Sovde told the council.

The city has approximately $42 million in outstanding debt.

Brian Beckley can be reached at 253-826-3260, ext. 5052, or brian.beckley@sumnerreporter.com.

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