City's AAA bond rating reaffirmed

Fri, 10/17/2014 - 06:10

The City of Winchester’s AAA general obligation bond rating has been affirmed again by Standard & Poor's Rating Services (S&P) and S&P views the outlook for this rating as “stable”. Rating services provide these evaluations of a bond issuer's financial strength, or its ability to pay a bond's principal and interest in a timely manner. The AAA bond rating is the highest credit rating that an entity can receive.
This high bond rating means a low cost of borrowing on the City’s property tax supported debt which allows us to maximize the amount of bond capacity for many of the City’s capital projects. “Similar to a person’s credit score, the City’s bond rating reflects the City’s capacity to meet financial commitments,” explains the City’s Finance Director Mary Blowe. “The stronger the borrowing power, the lower the interest rates will be for capital projects funding.”  For the community, it also means that there is continued strong financial management program including long-range capital planning.
“This reaffirmed bond rating comes at the most opportune time,” said City Manager Eden Freeman.  “We are getting ready to refinance several of our general obligation bonds and this high rating will save the City and its tax payers a significant amount of money in interest charges.”
Within the Commonwealth of Virginia, there are only eight other cities that maintain an AAA rating from Standard & Poor’s: Alexandria, Charlottesville, Chesapeake, Fairfax, Falls Church, Poquoson, Suffolk, Virginia Beach.
“Affirmation of our AAA rating is solid evidence of Winchester’s financial stability as we navigate today's difficult economic conditions and responsibly plan for necessary capital projects in the future,” said Council President John Willingham.
Standard & Poor’s used four key factors to rate the City’s debt issues: economy, management, financial well-being and debt. Specifically, the Standard & Poor’s rating cited the following in its rating report for Winchester (S&P explanations follow):
Strong economy, which benefits from participation in the broad and diverse economy of the Shenandoah Valley;
Very strong budgetary flexibility with 2013 audited available reserves at 27% of general fund expenditures;
Adequate budgetary performance, with a relatively stable revenue stream;
Very strong liquidity providing very strong cash levels to cover both debt service and expenditures;
Very strong management with strong financial policies, which have allowed for the maintenance of very strong reserve levels; and
Strong debt and contingent liabilities position.