RIFLE, Colo., January 12, 2018—Grand River Health took advantage of historically low interest rates and sold tax-exempt bonds yesterday with a true interest cost of 3.549%.
“We were very happy with our final interest rates, as the last few weeks leading up to pricing saw considerable gains in global stock markets and confusion about the future direction of US interest rates,” said Grand River Health CEO Jim Coombs.
Working with bond underwriter George K. Baum & Company of Denver, Grand River Health was able to lock in a true interest cost of 3.549% for the $89,400,000 bond issue. The low rates were supported by the use of bond insurance from Assured Guaranty, which boosted the bond’s rating from “BBB+” to “AA” from Standard & Poor’s. “Although voters approved the bond issue by a 67% margin back in November, waiting until the interest rate markets calmed down in January enabled Grand River Health to get lower rates than if we had sold them in late December,” said George K. Baum & Company Senior Vice President Todd Snidow.
“We are delighted to be locking in these rates for the project and getting our construction projects going before building costs increase,” said Board of Director President Kip Constanzo. “We are pleased to report to local taxpayers that the bond issue was well received and we were able to do much better than the numbers approved by voters in the ballot question,” said Chief Financial Officer Christina Bolin. “We think that taxpayers should see an increase that is less than the $34 per $100,000 of home value communicated during our outreach. In fact, the total repayment cost of the bonds is more than $7 million less than what voters approved in November, due to the insured credit rating and low interest rates,” added Bolin.
The 20-year bond issue was sold with a 10-year call feature, which will hopefully allow the District to pay off the bonds early, as directed by the Board of Directors.