Agencies affirm city credit ratings
Published 10:39 pm Friday, July 19, 2013
Bond-rating agencies recently affirmed the city’s credit ratings ahead of its issuance of $57 million in new debt and refunding of bonds issued in prior years.
The ratings — AA+ from Standard & Poor’s and Fitch and Aa2 from Moody’s — mean two of the agencies have Suffolk listed as one step away from the vaunted AAA status — the gold standard in credit ratings for municipalities. Moody’s lists the city as two steps away from its top rating.
The new debt is expected to fund water and sewer projects, new equipment and a new facility for emergency communications, roadway construction projects and part of the Pioneer Elementary School project.
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City leaders celebrated the stable ratings.
“The city’s trend of increasing credit ratings since 2008 has been estimated to save the city over $20 million in debt service costs over the life of loans through lower borrowing costs on new money plus refinancing for savings,” Mayor Linda T. Johnson said in a press release. “Once we reach that AAA status, the savings will be even greater.”
Though officials hoped the AAA status would come this year, city financial adviser David Rose of Davenport and Company noted in a meeting last month that the agencies generally like to wait at least three years between upgrades.
In a July 9 statement, Moody’s said the city faces the challenge of an above-average debt burden and warned more debt could make the rating go down. However, it noted the city has a “strong and carefully managed financial position,” ample general fund reserves and a “sizeable tax base with development potential.”
In announcing its rating, Fitch noted the city’s balanced budget, high reserve levels and “prudent fiscal policies and planning.” It also lauded “good debt management guidelines” and the expanding employment base, but noted most residents still rely on jobs in other cities.
The savings from the latest issue of bonds is expected to be about $678,000. The city currently has more than $340 million in outstanding general obligation bonds.