The Iowa Central Community College board approved Tuesday refinancing its general obligation bonds.
By refinancing $13.67 million in its 2008 and 2009 bonds, the board will save taxpayers approximately $1,311,286.24.
"We had the second half of our refinancing of our general obligation bonds," Angie Martin, associate vice president of business affairs, said. "They actually ended up pretty good, probably not as well as we had originally thought, there was a lot of change in the market, but we're still very happy with the total savings we had."
According to Martin, the market for State and Local Government Securities closed and the bonds were taken to the open market.
Scott Stevenson, senior vice president of public finances with Ruan Securities of Des Moines, explained SLGS and the federal debt limit to the board.
"As an issuers of tax-exempt debt, when you do an advance refund you've got the ability to fund your escrow account with direct purchase from the United States Treasury," he said. "When there's not an issue related to the debt ceiling, it's open for your use at any time, and that's what we traditionally would use. In this instance, the SLGS window is closed because it's one of the measures that U.S. Treasury takes when they're approaching their debt limit.
"In lieu of that, our only option is to purchase those securities on the open market."
While this is usually done for economic purposes, Stevenson said, "in this instance, you're left with no choice."
"We were still able to execute at good levels," he said. "The escrow yield actually is higher than what you experienced when we did the transaction back in 2012, last month, by four basis points. Nonetheless, it's a little higher."
The fiscal cliff has created some turmoil in the marketplace, Stevenson said.
"We saw interest rates a little higher on this series relative to where we were at back in December," he said. "However, we still came in at $1.3 million in savings. That was a little bit below our previous target, but still a pretty handsome margin there."
Stevenson said he is happy with the results, potential risk having been avoided.
"We missed our target by a little bit, but given the circumstances with everything that's going on in the marketplace, we're still happy with the results," he said.
Dan Kinney, Iowa Central president, said the savings is "very good."
"It's $1.3 million in savings we didn't have," he said.