The Dunedin City Council is celebrating a win after securing a new debt servicing deal that will save $170,000 a year.
The council's treasury company, Dunedin City Treasury Ltd, this week announced it had renegotiated a bond, covering $50million of existing council debt, for the next seven years.
The sum was part of the council's overall group debt of $598million, and the new deal meant interest payments would drop by about $170,000 a year, DCTL manager Richard Davey said.
Dunedin Mayor Dave Cull told the Otago Daily Times the good result was ''just one more step in finding savings, efficiencies and more economical ways of doing what we want to do''.
It meant pressure on the council's projected budget would ease, as it would be ''$170,000 we won't have to find'' in future years, he said.
The announcement of the bond deal came yesterday, the same day a previous four-year bond, also worth $50million, matured.
Mr Davey said interest had been set by adding a fixed margin of 0.90% to the 90-day bank bill rate to calculate payments, which were adjusted by changes in the 90-day rate every three months.
The new deal lowered the margin to 0.56%, while pushing out the life of the bond from four years to seven years, he said.
He could not say yesterday what the total cost of servicing the bond had been,before the $170,000 saving.
But, while the 90-day rate could fluctuate ''significantly'' every three months, DCTL had adopted a ''conservative'' risk management approach to hedge against interest rate changes.
The saving, and the longer term set for the new bond, was a ''good result'' that highlighted investors' confidence in the future financial performance of the council group, he believed.
That was helped by the council's success in securing an AA credit rating from Standard and Poor's, Mr Davey said.
