Bartlett Regional Hospital could save $100,000 a year in interest payments if it acts now to refinance its debt.
Deven Mitchell of Alaska’s Municipal Bond Bank gave a presentation to the Bartlett Board of Directors about the Bond Bank and the debt it helped procure to build the hospital.
Blank said the Bond Bank sells AA bonds backed by the state of Alaska.
“Very highly rated credit,” Mitchell said.
Bartlett would be refinanced at around 3 percent — a meaningful improvement over it current rate, Mitchell said.
CBJ issued its $29 million in Hospital Revenue Bonds with Alaska’s Municipal Bond Bank in 2004.
“Interest rates are low,” Mitchell said. Which is good and bad for the hospital’s refinance. While interest rates on loans are low, so too does the hospital have to invest in low interest escrow.
“You’ll be earning less than one (percent),” Mitchell said.
However, Mitchell said the market changes all the time. So the hospital’s escrow could grow at a faster rate.
While Mitchell did not give the board advice on whether to refinance now or later, he gave them some advice.
“Is this enough money that you could care,” Mitchell said.
Bartlett could save $50,000 to $60,000 a year now, Mitchell said. And in five years he said he expects that to double.
The board can decide whether or not to refinance when it chooses. It can wait and see if the economy improves and refinance before loan rates increase.
“You can kind of roll the dice and wait,” Mitchell said. The economy looks pretty flat, he said, but if things changed the board could act.
Refinancing typically takes three months, Mitchell said.
• Contact reporter Russell Stigall at 523-2276 or at firstname.lastname@example.org.