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Politics & Government

Swaption Termination Cost School District $8.2 million

Unexpected fees cost an extra $630,000, but savings could be $5.6 million over 5 years.

Reporting Monday evening on , district officials said the new loan cost about $7.5 million plus an additional $630,000 in unexpected termination fees.

The full price to the district totaled about $8.2 million in the end, according to the Morning Call, or $400,000 more than the board planned for in August.

Still, the move, part of the current board and administration's efforts to reverse the decisions of the previous administration and boards to invest heavily in variable rate bond options, will save taxpayers an estimated $5.6 million over the next five years.

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The district will continue to pursue the shedding of it's variable rate debts, with it's next move likely to be the termination of its last swaption deal with Morgan Stanley, reports The Express-Times.

That deal would cost the district $100,000 to end, but the termination fees are the lowest they've been and the lowest the district is likely to see, said the district's financial advisor, Scott Shearer, of Public Financial Management.

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A two-year floating note is also set to come due for renewal in January of 2012, but the renewal deal is expected to be more favorable than the current one, Shearer has said.

The move to refinance the $72 million was prompted by world market conditions affecting the bond holder, Dexia, which drove the variable rate up and made ever-increasing payments on the loan unsustainable, district administrators previous said.

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