CITY TO REFINANCE SHOW ME CENTER BONDS

The city of Cape Girardeau will take advantage of historic low interest rates and refinance, for the second time, bonds used to construct the Show Me Center.

City Manager J. Ronald Fischer said Wednesday that the Show Me Center bonds have been refinanced at 4.88 percent interest, which is expected to save more than $240,000 in financing costs over the life of the bonds.

Fischer said similar action in 1987, which lowered the rate on the Show Me Center bonds from 10 percent to about 7 percent, generated about $700,000 in debt savings.

"When this is complete, we will have saved nearly $1 million in financing costs over the term of the bonds," Fischer said.

The initial Show Me Center bond issue, approved by voters in 1983, was for about $5 million.

On Monday, the city received four bids to refund the bonds, all which came in below 5.2 percent. Boatmen's National Bank was the low bidder. Others included Mercantile Bank, 4.89 percent; Prudential Bache, 5.03 percent; and Lehman Brothers, 5.12 percent.

Fischer said this is the last time the city will be able to refund the bonds before the debt is retired in 2004.

"I sure don't think rates will go any lower, but two years ago I never thought we'd be seeing the rates we're seeing now," he said. "In 1987, we were able to catch rates at the low end and they went back up after that."

The city manager said it's difficult to judge what the bond market will do over the next several months.

Fischer said he recently talked with the chief broker for A.G. Edwards Investment Co., who told him he expected a major fluctuation in the bond market in the next couple weeks, but as testament to the market's volatility couldn't predict whether rates would rise or fall.

"I think we're as well off to take the savings and run with it," Fischer said. "We know now we can save this $240,000."

As with the Show Me Center bonds, the city recently was able to secure lower than expected interest rates on the Convention and Visitors Bureau recreation project.

Those bonds will generate slightly more than $3.7 million for a softball and soccer complex at Shawnee Park, development of a general-use park in northwest Cape, and construction of a multi-purpose building at the new park.

Fischer said the city hopes it also will be able to refinance additional debt incurred from other public facilities projects.

"We've got about $16 million worth of other bond indebtedness out there, and our average coupon is about 6.8 to 7 percent interest," he said. "We're going to get all the paperwork ready on those bonds, so that if we get another dip in the market, we can pull the plug and within three days be in the market pricing those bonds."