Bond ratings and prudent financial management

It might seem that the bond markets reflect directly on the management of municipalities.

Hingham earns AAA bond ratings
Wednesday, October 31, 2007
For the second time, Hingham has achieved the rare distinction of receiving the highest possible bond ratings from three Wall Street ratings agencies: Standard and Poor’s, Moody’s and Fitch Ratings.Ted Alexiades, Hingham’s finance director, said there are other Massachusetts cities and towns that would be in good position to receive across-the-board AAA ratings if they applied to all three ratings firms. But many communities limit their participation to Standard and Poor’s and Moody’s, the two better-known agencies.While applying to all three takes time, “We think our bonds sell better, because people see all three ratings,” Alexiades said.The AAA ratings, Alexiades said, not only help reduce the amount of interest the town pays on its debt, but also demonstrate to citizens that their tax dollars are being used responsibly.Hingham ranks in the top 10 percent of the state’s cities and towns in per-capita income, but Alexiades noted that high bond ratings also reflect prudent financial and managerial practices. The town has received certificates of excellence in financial reporting from the Government Finance Officers Association for 10 straight years.Low staff turnover, particularly among department heads, also has helped to strengthen Hingham’s financial standing, Alexiades said.
By MMA Associate Editor Mitch Evich

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September 11, 2007, Moody's Investors Service Press Release: Moody's Investors Service has assigned A2 ratings to the Town of Middleborough's $7.95 million General Obligation Municipal Purpose Loan of 2007 Bonds and to the town's $3.49 million General Obligation Landfill Bonds (Subject to Federal and Massachusetts Income Taxation). Concurrently, Moody's has affirmed the town's long-term A2 rating and assigned a negative outlook affecting $34.7 million in outstanding long-term debt. The Series A bonds are issued to permanently finance various town capital projects, including the final tranche of bonds issued to finance the town's share of its junior high school renovation. The Series B bonds are issued to permanently finance remediation of a failed landfill. Both series of bonds are secured by the town's general obligation limited tax pledge as debt service has not been excluded from Proposition 2 ½. Affirmation of the A2 long-term rating incorporates Middleborough's moderately-sized and growing tax base with average wealth and income levels, an affordable debt burden, and a tax base experiencing moderate expansion. Assignment of the negative outlook reflects a significantly narrowed financial position with slim reserve levels which are unlikely to be replenished in the short term. JoryPepper