Timing of Region of Waterloo debt issue saved $1.4M

The Region of Waterloo estimates it saved about $1.4 million worth of interest payments by carefully timing its latest debt issue.

The region and the cities of Kitchener, Cambridge and Waterloo joined to issue $65 million of debentures at historically low interest rates over ten and 20-year terms on October 21.

Craig Dyer, the region’s chief financial officer, wrote in an email that the region and its advisers closely followed shifts in the bond market for weeks.

“Government of Canada bond yields increased in the first two weeks of September and then dropped significantly over the following four weeks.

“Had the Region launched the deal at the peak on September 18, the [weighted average] cost of borrowing would have been approximately 3.277 per cent,” Dyer said.

However, with patience and thorough analysis, the region was able to secure an overall weighted average interest rate of 3.022 per cent.

For comparison purposes, by issuing the debenture on October 21 rather than September 18, Dyer calculates the region saved approximately $1.4 million in interest payments over the 20-year term.