The Board of Education of the Dowagiac Union Schools was pleased to announce Friday the successful sale of its $9,945,000 2010 refunding bonds.

The bonds were issued to fund the outstanding balances of the 2002 building and site bonds that financed construction of Dowagiac Middle School.

Much like a homeowner refinancing a mortgage, the district has taken advantage of historically low municipal bond interest rates to reduce the cost of capital investments, directly benefiting the taxpayers.

“Dowagiac Union Schools is very pleased with the results of this sale and the savings it provides our taxpayers,” said Dr. Mark Daniel, Dowagiac Union Schools superintendent. “We’re especially pleased to have reduced interest expense by nearly $570,000 through this transaction. We appreciate the effort of our underwriter, Fifth Third Securities, to bring our bonds to market and secure the savings for the Dowagiac community.”

“The continued economic instability and long-term employment challenges make this effort even more important to our residents,” Daniel said.

As part of the financing process, Standard and Poors (S&P) applied its strong AA- credit rating.

In rating the district, S&P noted as strengths the district’s low debt burden, good management practices, adequate financial reserves and proximity to employment bases in Kalamazoo and north-central Indiana.

The district also issued bank-qualified debt, further reducing the interest cost. Finally, the bonds were qualified for the Michigan School Loan Revolving Fund program. The state’s rating is applied to the bonds, an important factor when investors make their purchase decision.

These factors combined enhanced the marketability of the bonds.

The school district’s financing, conducted by the Investment Banking Division of Fifth Third Securities, sold at true interest cost of 3.40 percent.

Craig Kahler, vice president of Fifth Third Securities Inc., and the lead investment banker on the financing, stated, “Dowagiac Union Schools bonds were very well received in a market hungry for quality tax-exempt bonds. The board and administration are to be commended for their willingness to seek every means to save taxpayer dollars. They have once again demonstrated responsible management of the district’s resources, striving to reduce the burden for all who pay taxes in support of Dowagiac schools. We extend our thanks for the opportunity to serve the district as underwriter.”