LUBBOCK, Texas (NEWS RELEASE) – The following is a news release from the City of Plainview:
The City of Plainview’s bond rating was confirmed as a AA- Rating with a stable outlook from the S&P Global Ratings for the proposed refunding of the outstanding 2009 General Obligations Bonds and 2010 Certificates of Obligations Bonds that financed the recently completed Water and Sewer Projects. These bonds were issued for the Milwee Lift Station, U.S. Highway 70 utility relocations and the two elevated water storage tanks.
“Refunding these bonds is like refinancing your home for a lower interest rate” City Manager Jeffrey Snyder said.
What is a S&P Global Rating?
An S&P Global Rating is a forward-looking opinion from S&P’s about the creditworthiness of an obligor (the City) with respect to a specific financial obligation (project bond debt or general obligation bonds), a specific class of financial obligations, or a specific financial program (City budget).
Why is it important?
The Standard and Poor’s company rates how likely debt will be repaid from the entity in question. The highest rating is AAA – the City of Plainview’s AA- is a rating that states the confidence that the City is in good financial shape.
How are they calculated?
The Rating assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years). In determining a rating outlook, consideration is given to any changes in economic and/or fundamental business conditions.
What does mean to a citizen?
Your City is in good financial shape – the Rating Report notes:
- Strong management with good financial policies and practices
- Strong budgetary performance with 6.3% operating surpluses in the general fund and 7.6% in the total government fund
- Very strong budgetary flexibility – funds available at 122% of operating expenditures or $16.2 million
- Very strong liquidity
- Debt and contingent liability is weak
- Strong institutional framework – scores for Texas municipalities is strong.
“Your City Council and management have worked diligently to ensure that your dollars are well managed to provide vital services to our community,” says Mayor Wendell Dunlap.
Recent Bond Sale Results
Specialized Public Finance, the Financial Advisor for the City, finalized the negotiated 2020 General Obligation Bond Refunding sale that resulted in reduced interest rates that ranged from 3.0% to 3.8% on the current bond debt to an interest rate of 1.65%. This will result in annual savings of $47,750 every year (or $482,703 over the life of the bonds).
“With the volatility in the municipal bond market, we saw an opportunity to refund some of the current debt obligations that were callable,” says Snyder. “Fortunately, we were able to receive a lower interest rate, which will create capacity to address future water and sewer infrastructure needs in this community.”
(News release from the City of Plainview)