Post by Admin on Apr 4, 2014 19:13:18 GMT
QAC’s Bond Rating Upgraded
Queen Anne’s County’s financial credit report was upgraded April 1, when Moody's Investors Service, Inc. took the county off of “Negative Watch” and xxigned an Aa2 rating which resulted in a lower than projected interest rate on the FY14 bond sale (3.16%.)
“Moody's has affirmed the Aa2 rating on the county's outstanding long-term debt. The negative outlook has been removed. Proceeds from the current issue will be used to fund various capital projects including a county complex, a 911 radio system, and renovations to Stevensville Middle School,” according to Moody’s report.
Similarly, Fitch Ratings had revised the county’s AA+ bond rating last year, from Negative to Stable. The rating agencies attribute the better credit scores to better financial management.
“The removal of the negative outlook reflects the county's improved financial position,” according to the report. “Since fiscal 2011, the county has increased its General Fund balance by 175% through implementation of various expenditure cuts and revenue raising strategies including increasing the property and income tax rates in fiscal 2012. Going forward, we expect the county to maintain a satisfactory position supported by conservative management and recently instituted formal financial and debt policies.”
Commissioner President Philip Dumenil said, “When we took office we inherited a projected $18 million budget deficit and the potential of seeing the county’s AA+ bond rating downgraded. This Board of Commissioners made dramatic budget cuts, increased revenues and reestablished our Rainy Day Fund.”
Commissioner David Dunmyer said, “Now two years later, we have returned the county to financial stability and showed a full understanding of the level of financial wellness we need to maintain our bond rating. Having “credit watch” lifted from the rating of the county was an indicator of the improvement in our financial position He said, had it not occurred, the county would have been downgraded by Fitch and it is likely that Moody’s would have followed. Loss of a bond rating not only costs the county more in debt service, it is a greater indication of an entities’ inability to operate prudently. Downgrading to, ‘AA’, would cost the county approximately five basis points in the current market environment. This basis point difference on our recent bond issue would have added approximately $131,360 to the county’s debt service costs.
When looking forward to future bond sales, this higher credit rating and lower interest rate is expected to save Queen Anne’s County between $350,000 to $400,000, said Queen Anne’s County Finance Director Jonathan Seeman. “It is also important to note that even with bond sales in future years the county is still below the three key bond debt ratios of; Outstanding Debt as a percentage of Total Taxable Base (1.70% actual vs. 2.5% maximum), Outstanding Debt per Capita ($2,583 actual vs. $3,000 maximum) and Debt Service as a Percentage of General Fund Expenditures (11.1% actual vs. 12% maximum).”
Queen Anne’s County’s financial credit report was upgraded April 1, when Moody's Investors Service, Inc. took the county off of “Negative Watch” and xxigned an Aa2 rating which resulted in a lower than projected interest rate on the FY14 bond sale (3.16%.)
“Moody's has affirmed the Aa2 rating on the county's outstanding long-term debt. The negative outlook has been removed. Proceeds from the current issue will be used to fund various capital projects including a county complex, a 911 radio system, and renovations to Stevensville Middle School,” according to Moody’s report.
Similarly, Fitch Ratings had revised the county’s AA+ bond rating last year, from Negative to Stable. The rating agencies attribute the better credit scores to better financial management.
“The removal of the negative outlook reflects the county's improved financial position,” according to the report. “Since fiscal 2011, the county has increased its General Fund balance by 175% through implementation of various expenditure cuts and revenue raising strategies including increasing the property and income tax rates in fiscal 2012. Going forward, we expect the county to maintain a satisfactory position supported by conservative management and recently instituted formal financial and debt policies.”
Commissioner President Philip Dumenil said, “When we took office we inherited a projected $18 million budget deficit and the potential of seeing the county’s AA+ bond rating downgraded. This Board of Commissioners made dramatic budget cuts, increased revenues and reestablished our Rainy Day Fund.”
Commissioner David Dunmyer said, “Now two years later, we have returned the county to financial stability and showed a full understanding of the level of financial wellness we need to maintain our bond rating. Having “credit watch” lifted from the rating of the county was an indicator of the improvement in our financial position He said, had it not occurred, the county would have been downgraded by Fitch and it is likely that Moody’s would have followed. Loss of a bond rating not only costs the county more in debt service, it is a greater indication of an entities’ inability to operate prudently. Downgrading to, ‘AA’, would cost the county approximately five basis points in the current market environment. This basis point difference on our recent bond issue would have added approximately $131,360 to the county’s debt service costs.
When looking forward to future bond sales, this higher credit rating and lower interest rate is expected to save Queen Anne’s County between $350,000 to $400,000, said Queen Anne’s County Finance Director Jonathan Seeman. “It is also important to note that even with bond sales in future years the county is still below the three key bond debt ratios of; Outstanding Debt as a percentage of Total Taxable Base (1.70% actual vs. 2.5% maximum), Outstanding Debt per Capita ($2,583 actual vs. $3,000 maximum) and Debt Service as a Percentage of General Fund Expenditures (11.1% actual vs. 12% maximum).”