City's AAA bond rating reaffirmed for fifth time

Thu, 03/11/2021 - 10:30

The City of Winchester’s AAA general obligation bond rating has been affirmed for the fifth time by Standard & Poor's Rating Services (S&P). The AAA rating was first assigned on October 7, 2013 and is the highest credit rating that a locality can receive. Winchester is one of only eleven cities in Virginia to maintain a AAA rating from S&P.

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. S&P evaluates economy, financial position, long term liabilities, and management when determining the rating. The 2021 ratings report cites the following as justification for the ratings confirmation:

“[Winchester’s] 'AAA' rating continues to benefit from the city's very strong reserves, very strong management team with well-embedded financial management policies, and robust economy that continued to expand despite the pandemic...On the whole, while economic uncertainty caused by the pandemic remains, we expect Winchester's overall credit quality will remain stable.”

“The year 2020 will long be remembered as an extremely challenging year. The fact that the City of Winchester continues to be recognized by S&P with the highest possible bond rating of AAA, even in spite of the current economic uncertainties resulting from the COVID-19 pandemic, speaks volumes on the leadership of City Council and staff to navigate unprecedent challenges,” stated Kevin Rotty, the City’s Financial Advisor.

This high bond rating means a low cost of borrowing on the City’s property tax-supported debt which allows the City 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. The high bond rating means a low cost of borrowing on the City’s property tax-supported debt which allows us to maximize the amount we can borrow for future capital projects. For the community, a high bond rating means that there is a continued strong financial management program including long-range capital planning.

“City staff and I are committed to being careful stewards of taxpayer resources,” stated City Manager Dan Hoffman. “We are always seeking to not only create efficiencies, but also build a strong economy that provides opportunities for all. The affirmation of our AAA rating is one more testament to that commitment.”