Town’s Top Bond Rating Reaffirmed, Secures Low Interest Rates

aaa credit rating

The town’s bond rating has been reaffirmed as AAA by Standard and Poor’s. It is the highest rating possible.

Each time a bond is issued by the town, its credit rating is reviewed and evaluated by Standard & Poor’s to determine if they will make adjustments, according to Town Manager Michael Lombardo.

The reaffirmed AAA rating came after a recent conference call involving representatives from Standard & Poor’s along with Hamilton Finance Director Marisa Batista, Treasurer/Collector Cheryl Booth, Lombardo and bond counsel from FirstSouthwest.

The conference call was a way for town leaders to highlight the factors that contribute to the town’s high bond rating and reassure the rating agency that the town government continues to deserve AAA status, according to Lombardo.

“I feel the conference call went very well,” Lombardo told the Board of Selectmen in a recent update. “S&P was impressed with the stability of the town budget and management, strong reserves, excess levy capacity of over $2.4 million, and strong market sale prices for single family homes.”

The town sought a new bond rating as its goes out for bonds to fund land acquisition and water system improvements, which have both been previously approved by Town Meeting voters.

The AAA rating means that the town government pays the lowest interest rates possible when borrowing money, Lombardo said. Additionally, the AAA rating also makes the town’s bonds highly desirable in the investment community. For example, for the most recent issuance, the town received 25 bids. And in addition to getting low interest rates, the town sometimes receives direct cash in the form of a bond premium, Lombardo said. In 2015, the town issued $7 million in bonds and received over $200,000 as a bond premium.

In Standard & Poor’s rating, it said that it believes Hamilton can maintain better credit characteristics than the nation in a stress scenario. Hamilton has a very high general fund balance as a percent of expenditures and very strong liquidity, according to Standard & Poor’s.

The rating also took into consideration what Standard & Poor’s said is Hamilton’s very strong economy, strong management, strong budgetary performance, very strong budgetary flexibility with an available fund balance in fiscal year 2016 of 18% of operating expenditures, very strong liquidity and a very strong debt and contingent liability position.

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