Area interest rate swaps completed between 2004-2012
While a group of state senators have proposed making the swaps illegal, state documents only indicate that the transactions took place and do not show whether the school district or county involved lost money in the deal.
PENNCREST School District — $6.35 million swap, 2004
Conneaut School District— $27.34 million swap, 2005
PENNCREST School District — $9.525 million swap, 2005
Crawford Central School District — $20 million swap, 2006
Crawford Central School District — $10 million swap, 2007
West Middlesex School District — $14 million swap, 2005
Mercer County — $28.5 million swap, 2005
Mercer County — $28.5 million swap, 2006
West Middlesex School District — $11.2 million swap, 2006
Mercer County — $29.3 million swap, 2007
West Middlesex School District — $3.3 million swap, 2009
Mercer County — $15.6 million swap, 2011
Mercer County — $28.5 million swap, 2011
What is in an interest rate swap?
A swap is a contract between a bond issuer, such as a school district or other public entity, and an investment bank, in which the parties bet on which way interest rates will move. In theory, swaps allow government entities to enter into variable-rate debt financing in order to take advantage of low interest rates and, at the same time, hedge against the possibility of those same interest rates going up.
Critics say that swaps are just a form of gambling. How much is won or lost is determined by the size of the underlying debt, how much interest rates fluctuate and other factors.