June 20, 2017
Standard & Poor’s Affirms City of Portsmouth’s AAA Bond Rating
PORTSMOUTH, NH – Standard & Poor’s (S&P) rating agency has again affirmed the City’s long-term rating of “AAA,” the highest obtainable rating. S&P weighs a host of financial, economic, debt and managerial information in order to assess the City’s performance.
In the rating report, S&P cited the City’s very strong economy, very strong management with strong policies and practices, strong budgetary performance, very strong budgetary flexibility, very strong liquidity, and strong debt and contingent liabilities position and as positive credit factors. “We rate the City higher than the nation because we believe Portsmouth can maintain better credit characteristics than the nation in a stress scenario based on its predominantly locally-derived revenue base, and our view that pledged revenue supporting debt service on the bonds is at limited risk of negative sovereign intervention,” said S&P.
Due to outstanding bond ratings, the City continues to experience low interest rates when financing City capital projects. Finance Director Judie Belanger announced that the City received seven competitive bids from bond underwriters on Tuesday, June 13, 2017 for an $18,510,000 general obligation bond issue ranging from five to 20 years. Proceeds from the bond issuance will be used to finance Citywide street and sidewalk improvements, elementary school facility improvements, the acquisition of a fire apparatus, improvements to Fire Station 3, water line and system storage improvements, and sewer line and pumping station improvements. Citigroup Global Markets Inc. was the winning bidder on the bonds with an average interest rate of 2.238%. “In addition to the excellent bond rate, the City received a bond premium of $1.595 million which may be used for other capital projects with an equal or longer useful life of the issue,” Belanger said.
At the same time, the City issued a $22 million bond anticipation note. The winning bidder was Morgan Stanley & Co., LLC with a net interest cost of .984%. This is a short-term note to fund the construction of the Foundry Place Parking Facility prior to its opening. Permanent financing will take place in fiscal year 2019,” Belanger announced.
According to City Manager John Bohenko, this high bond rating validates the City policies that have saved the City a substantial amount of money over the years. “I am very pleased that we have been able to maintain the highest obtainable bond rating by S&P in light of various economic challenges. Our AAA rating reflects the City Council’s commitment to financial stability through implementation of various stabilization policies and a strong fund balance,” Bohenko said.