ELKTON — The country’s two largest bond rating agencies reaffirmed Cecil County’s ratings this month following a meeting in October.
The county will maintain solid bond ratings, AA+ from Standard and Poor’s Global (S&P) and Aa2 from Moody’s Investor Services, which indicate that investors are willing to back projects here.
The best bond ratings are AAA, one step above the county’s current rating at S&P and two steps at Moody’s.
“We are pleased and encouraged with the bond ratings we have received. It is evident that the agencies recognize our fiscal strengths and bond commitments. We will continue to work towards improving our budget and financial management practices in hopes of bettering our ratings going forward,” County Executive Alan McCarthy said Friday in a statement.
Bond ratings determine how low of an interest rate a government entity will be charged when they go to sell bonds for capital projects. That’s why governments strive for improved bond ratings.
It’s a bit like how a person with an excellent credit rating can get a better deal on a loan from the bank.
Cecil County has maintained its current high ratings since 2014, when S&P upgraded the county’s bond rating in from AA to AA+.
Specifically, Moody’s assigned an Aa2 rating to Cecil County’s $51.8 million Consolidated Public Improvement and Refunding Bonds of 2017, while maintaining the Aa2 rating on the county’s $227.4 million of parity debt outstanding. The agency based its rating on a “sound financial profile supported by conservative budgeting practices” and a “stable tax base with average socioeconomic factors,” according to its report.
Furthermore, the rating reflects the county’s “moderately sized tax base with average demographics, stable reserve position and an above average, but manageable, debt position.”
Similarly, S&P maintained its AA+ rating for the county, stating that it “reflects our opinion of the county’s strong economy, with access to a broad and diverse metropolitan statistical area and a very strong management, with ‘strong’ financial policies and practices under our Financial Management Assessment (FMA) methodology.”
“Cecil County’s budgetary flexibility is strong, in our view, with an available fund balance in fiscal 2017 of 14 percent of operating expenditures, or $25.6 million,” the agency added.
Both rating agencies made visits to the county in October to review economic development projects in person, a departure from past meetings that were held in New York City and discussed over paper.
Cecil County Director of Administration Al Wein, who has overseen numerous bond rating adjustments over his nearly 20-year career as the county’s administrator, credited McCarthy’s vision for the sustained ratings.
“I strongly believe that County Executive McCarthy has set us on the path for future credit rating improvement through the prudent fiscal decisions that were made with the FY 2018 budget,” he said in a statement. “We will build upon that foundation and are happy to maintain our high grade ratings of AA+ with S&P Global and Aa2 with Moody’s. Our team will continue to work to improve our credit ratings through the development of sound fiscal policies in an effort to save taxpayer dollars.”