State transportation system overseers on Monday approved a recommendation to pay down the fixed rate on two interest rate swap agreements, a plan that could reduce the agency's future liabilities by $35.6 million.
Amending the rate swaps with JP Morgan is part of a broader MBTA and Massachusetts Department of Transportation effort to secure more favorable terms on transportation debt.
The swap savings come at a price, though.
The MBTA's Fiscal and Management Control Board approved plans to spend no more than $34 million to pay down fixed rates on two swaps held by JP Morgan to 2 percent. The current rates on the swaps are 5.2 percent and 5.6 percent, according to the MBTA.
The goal is to "find places where we can chip away at future financial obligations of the T," MBTA Treasurer Paul Brandley said.
As of early December, the MBTA had a $5.1 billion in outstanding debt, Brandley said.
"As we seek to put the MBTA on a path to fiscal stability and to make the right long-term decisions for the organization, executing a transparent, comprehensive debt strategy has been a top priority of the management team and of the board over the last 18 months," Acting MBTA General Manager Brian Shortsleeve said at the control board meeting.
The $33.1 million payment that's expected to facilitate the transaction will come from the MBTA's Deficiency Fund, which has a balance of $39.4 million.
The MassDOT Board's Finance and Audit Committee will be asked to approve the interest rate swap amendments at a meeting in two weeks, Shortsleeve said.