Municipality Of Anchorage Port Of Anchorage Loan Agreement with US Bank $40,000,000
On Monday June 24, 2013, the Municipality closed a $40,000,000 Loan Agreement with US Bank and borrowed the full amount to retire the Municipality’s outstanding commercial paper notes for the Port. The initial monthly interest rate on the note is 0.995%. This transaction terminates the commercial paper program established for the Port in May 2008.
Loan Agreements and commercial paper programs are variable rate short term borrowing programs frequently used as a financing tool for interim financing of capital projects and construction programs and are usually refunded by the issuance of long-term revenue bonds. The Loan Agreement is secured solely by the operating revenues of the Port and is not a general obligation of the Municipality of Anchorage. The cost savings of continuing to utilize a short term borrowing program prior to the issuance of long term revenue bonds is currently saving the Port in excess of $1.2 million per year. In today’s marketplace the cost of funds under a Loan Agreement is less than the cost of funds for a commercial paper program.
Chief Fiscal Officer, Lucinda Mahoney noted, “We are very pleased with the interest rate we received from US Bank which is based upon a fixed premium over one month LIBOR. This Loan Agreement will help keep operating expenses low for the Port during the Expansion Project.”
“This Loan Agreement with US Bank continues to demonstrate the interest in the Municipality by the banking community and the continued marketplace confidence in the Municipality of Anchorage as well as the outstanding management of the Municipality’s fiscal affairs,” Mayor Sullivan said. “I congratulate the Public Finance staff for the successful closing of the Loan Agreement with US Bank for the Port of Anchorage.”