JOLIET — Will County officials on Thursday discussed a potential bond refinancing opportunity that could save the county approximately $3.6 million in debt service costs by taking advantage of favorable market conditions.
Karen Hennessy, from the county’s finance department, presented the Executive Committee with details of a proposal to refinance bonds from 2015 and 2016, as well as tender some 2020 taxable bonds.
“Wells Fargo and Speer Financial Services, our partners in issuing debt, came out and made us aware of a refunding or a savings opportunity for our existing debt,” Hennessy told the committee.
The proposal includes two components: a traditional refunding of the 2015 and 2016 bonds at lower interest rates, which could save about $890,000 over the life of the bonds, and a tender offer for the 2020 taxable bonds, which could save approximately $2.9 million.
A bond tender involves contacting bondholders and offering to buy back their bonds at a price that would be less than what the county would pay over the lifetime of the original debt.
Committee Chair Judy Newquist emphasized the time-sensitive nature of the opportunity.
“There is a relatively short window of time right now where we can take advantage of this,” Newquist said. “The market conditions are such that it would be very financially advisable for us to do this, but of course that could change.”
Hennessy explained that if the committee moves forward, a “parameters ordinance” would be drafted to define the transactions and set thresholds that must be met for the refinancing to proceed. The ordinance would be valid for six months, allowing the county to act when market conditions are most favorable.
“Getting ready for a bond transaction is a three-month process,” Hennessy said. “The parameters ordinance would come back to the board in May or June, and that would give us till the end of the year.”
Committee member Jim Richmond asked about the fees associated with the transactions, particularly for the tender offer. Hennessy said the only upfront cost would be approximately $12,800 for information services and a tender agent, with additional costs applying only if the county proceeds with the tender.
Newquist noted that even if bondholders accept the tender offer, the county would not be obligated to proceed if market conditions change, meaning there is “very minimal risk to the county except for the fees.”
The committee took no formal vote on the matter but agreed to move forward with preparing a draft parameters ordinance for consideration at a future meeting, potentially as soon as May.
