« Weekly Update—September 12 | Main | Weekly Update—September 19 »
Kirk Gets Vote of Confidence from Bond Rating Agencies
By admin | September 16, 2009
(reproduced from the Gloucester Daily Times)
The country’s two leading bond rating agencies have maintained their rating of Gloucester’s finances this year — a vote of confidence, officials say, for a city that has just gone through budget cuts and a drinking water emergency.
Moody’s kept the city’s bonds at its A2 rating with a “negative” outlook and Standard & Poor’s at A with a “stable” outlook, both investment grade.
The higher the city’s bond ratings, the lower the risk it is considered — and the lower the interest rate it is charged to borrow money.
In its analysis of Gloucester’s financial position, Moody’s said the city’s increasing use of enterprise funds has helped stabilize city government despite the loss of revenue this year.
Although it predicts another contraction in the tax base for the upcoming year, Moody’s says the city’s “long-term growth potential remains positive.”
Standard & Poor’s cited “strong median household income levels” and “management efforts in making the budgetary adjustments needed to yield balanced operating results,” for the A rating.
Like Moody’s, Standard & Poor’s found low reserves a cause for concern.
“The city’s credit profile, however, remains weak due to its adequate-to-low reserve position heading into fiscal 2010,” S&P wrote, “compounded by the city’s limited revenue raising capability due to Proposition 2 1âÑ2 tax levy constraints.”
The city has recently received bids for a $21.5 million bond with the winning bid producing a 3.3 percent interest rate, according to a memo from Gloucester Chief Financial Officer Jeffrey Towne announcing the bond ratings.
“Needless to say the rates are excellent,” Towne said. “We need to next discuss how the city will plan to increase reserves and strengthen further the overall financial condition of the city.”
Patrick Anderson can be reached at panderson@gloucestertimes.comTopics: Progress
© 2005-2009