Wednesday, February 10, 2010

A Perfect Trifecta for HoCo Bonds

The Fitch Rating service has assigned a “AAA” to over $100 million of new county general obligation bonds. In assigning the top rating Fitch had good things to say about how our local government handles it finances.

“Historically sound financial management and planning has created a level of financial flexibility and cushion that serves to temper the impact of declining income tax and state aid revenues on the county's credit profile.

“Overall debt levels are moderate reflecting the county's controlled approach to growth, rapid principal amortization, and use of pay-go capital.”

This speaks well not only for the current but previous administrations as well since the service also “reaffirmed” over $800 million in existing general obligation bonds.

The higher the rating, the lower the borrowing costs.

Well done.


HoCoRising said...

It would be interesting to see whether cutting into the rainy day fund would affect the rating. I agree that it does speak well for the administration, especially since bond ratings took hits over the past two years.

Freemarket said...

It seems obvious to me that we are AAA largely due to the wealth of the tax base, not because of any current or previous administrations.

And it's important to note that this does not mean we should borrow more.

James P. Howard, II said...

It is not likely to affect the bond rating. Local government debt evaluation does not consider gross assets held by the issuer.

However, a shortfall in revenue itself may trigger a warning on the next review, depending on how spending and gross debt changes. I've got some nifty models for measuring these things.

jen said...

B/c the ratings agencies are always correct, independent, and operate solely for the good of investors...