Consultants say MassDOT could save $40 million by refinancing debt
BOSTON >> The Massachusetts Department of Transportation could save around $40 million over the next couple of decades if it chose to refinance some of its bonds, a financial consultant told transportation officials Wednesday.
Betsy Taylor, chair of MassDOT's Finance and Audit Committee, said an "advance" refinancing on 2010 bonds could be undertaken ahead of 2020 and officials would need more information before making any decision.
"This is a prudent example of cost-reduction with no change of service," Taylor told reporters after a meeting Wednesday. She said, "We can choose when we do this or not."
Taylor said the prime objective in considering the move is cost-savings for the transportation system.
"The thinking behind this is entirely about lowering interest rates," Taylor said. Taylor, the former director of finance and treasury at the Massachusetts Port Authority, said refinancing would not extend the term of the bonds.
Jeff Smith, president of the California-based Omnicap, told committee members that refinancing two series of bonds could yield $40.3 million in interest savings over the rest of the life of the borrowing.
"These numbers are very positive and the periods aren't that long," Taylor said after Smith's presentation.
Taylor said officials would want to learn more about the total cost of refinancing and rates the department could receive before taking the step.
"If the saving is strong enough it's to everyone's advantage to have us pay less sooner," Taylor said.
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