Staff writer
Rose Mary Saunders of Ranson Financial Associates presented a proposal to Peabody City Council Monday night to refinance general obligation bonds used to finance the city’s water and sewer systems.
The city will save approximately $302,453 on refinanced bonds. A savings of about $13,000 a year will be the annual impact on city finances.
By redeeming the original bonds and reissuing them, the city will be able to take advantage of lower interest rates.
Ranson Financial predicts an interest rate of 1 percent to 3.65 per cent per year. Current bonds carry interest rates from 4.25 to 5 percent.
Actual interest rate amounts will not be available until the city accepts bids for the bonds in late October.
Peabody’s new water system was started in 2000 and sewer system upgrades in 2006. The city issued two series of bonds for the water project, each with an annual payout until 2040.
Similarly, two series of bonds were issued to pay for the sewer project, which had a final payout date of 2047.
The end of the city’s obligation still will be 2040 as initially established with the water project, but the financial obligation for the sewer project also will end in 2040.