“We received a great deal of interest from investors due to our willingness to face our challenges and stabilize our long-term financial position,” Cook County Board President Toni Preckwinkle said. (Toni Preckwinkle photo)

Cook County is on the right track financially, according to the bond market.

Three major bond-rating agencies — Fitch, Moody’s, and Standard and Poor’s — all upgraded the county’s rating to “stable” this month. Also, interest from 50 financial institutions led to the county saving $56 million in a bond refinancing last week.

That savings came from $333 million in bonds being refinanced and going from a 4.83 interest rate to a 3.16 interest rate. Having 50 institutional investors in the running for the bond refinancing helped drive down the interest rate, according to county officials.

“We received a great deal of interest from investors due to our willingness to face our challenges and stabilize our long-term financial position,” Cook County Board President Toni Preckwinkle said. “The bond market is recognizing our significant efforts to responsibly confront the pension fund’s unfunded liabilities.”

Last summer, Preckwinkle backed a 1 percent increase in the county’s sales tax to address the unfunded liabilities in the county’s pension fund. That sales-tax hike was narrowly approved by commissioners.

The bond refinancing will mean $56.6 million in reduced interest cost-savings during the next 15 years.

That is money that will be on the table during budget appropriations.

“These savings will accrue over time and how they are used will be determined through the annual budget process,” said Preckwinkle spokesman Frank Shuftan. “… These are difficult financial times for the county — and all local governments.”

County officials said their strong management and willingness to confront fiscal challenges led to the cost-savings.

The bond market’s view of the county’s General Obligation bond credit spread — the interest cost above the tax-exempt benchmark interest cost for a AAA bond — peaked shortly after the Illinois Supreme Court invalidated Senate Bill 1 that would have revamped pension payments throughout the state. At that time, trading activity indicated a 2 percent higher interest rate for county bonds vs. AAA tax-exempt bonds in June 2015.

However, last week’s bond sale cut the county’s credit spread in half. The change generated $23.5 million in reduced interest costs from the refinancing. The remaining savings were generated by market timing as the county had its refinancing during a week when the 10-year tax-exempt municipal benchmark hit its second lowest value on record. Ironically, the only week when interest rates were lower was in late 2012, the last time the county had a major bond offering.

“Refinancing these bonds was a fiscally prudent measure that will provide important savings to Cook County,” Preckwinkle said. “Through our efforts to promote fiscal responsibility and the resulting interest from the bond market, we were able to save millions on interest costs and better manage our legacy debt. We will continue looking for financially responsible opportunities to reduce costs to taxpayers and encourage long-term stability.”

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