CHARLESTON -- West Virginia has refinanced Infrastructure Bonds that originally were issued in 1996.
The refunding of these bonds will save the state $6,290,084 in future payments and will result in an additional $470,000 per year to be available to the Infrastructure and Jobs Development Council for drinking water and wastewater projects across West Virginia.
This refinancing saves money by taking advantage of a lower interest rate without changing the number of future payments and is similar to a homeowner refinancing their home to lower the monthly mortgage payment. The interest payments were lowered from an average of 5.39 percent to 4.79 percent, which is an overall 6.6 percent savings. The bonds were priced on Sept. 28 and the transaction will close Nov. 1.
In the process of refinancing the three bond rating agencies; Standard & Poor's, Fitch Ratings and Moody's all reviewed the state's finances and upheld the investment grade rating. Standard & Poor's commented that the state has "solid financial management practices" and a "demonstrated willingness and ability to tackle large-scale financial challenges, which is evidenced by its successful handling of a roughly $3 billion liability associated with its Workers' Compensation System."
All three rating agencies complemented the decision to apply the one-time budget surpluses of the last two years to paying down unfunded debt in the Teachers Retirement System.
This $6.2 million dollar savings is another example of Gov. Joe Manchin's "Responsible Government" Initiative. These savings will benefit the state's infrastructure program and assist communities to provide better water and sewers, according to Manchin's office.