| City's bond rating improved by Moody's |
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By: MICHELLE WILLARD, Post Staff Writer
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Posted: Friday, November 14, 2008 11:09 am
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Murfreesboro’s credit rating just got a little better.
Moody’s Investors Service notified the city late last month it was upgrading its municipal bond rating to A1 citing its overall excellent fiscal condition.
“This is another indication of the excellent financial management offered by members of the city staff,” Mayor Tommy Bragg said. “This is an excellent accomplishment and continues a long-standing commitment by the city council members to fiscal responsibility for the city.”
Municipal ratings are opinions of the investment quality and are based upon the analysis of four primary factors relating to municipal finance: economy, debt, finances and administration/management strategies.
Similar to a personal credit rating, banks use the score to determine how much risk is involved with loaning money to a government. The higher the score, the lower the interest rate on money loaned.
An “A” rating indicates above-average creditworthiness with the highest score being “AAA.” Then numerical modifiers of 1 to 3 are applied to the generic rating category. A numerical modifier of “1” indicated that Murfreesboro ranks in the higher end of the “A” category.
In comparison, Rutherford County has a Moody’s rating of Aa2, meaning its rating is higher than the city. Also, the county got an upgrade last year in its Standard & Poor’s rating from AA to AA+, although its Moody rating stayed the same.
Moody’s upgraded the city because it pays bills on time and has a healthy savings account. Murfreesboro doesn’t have an S&P rating.
Or in economist speak, “The Issuer Rating reflects the city’s growing economic base which draws stability from a sizable institutional presence, trend of well-managed financial operations marked by solid reserve levels and manageable debt profile,” Moody’s analysts Neene Owate and Christopher Coviello and Senior Credit Officer Geordie Thompson wrote in a letter of notification.
“Moody’s expects the city to maintain its sound financial position given conservative budgeting practices, healthy fund balance levels and well-managed operations,” the letter continued.
By raising the city’s rating, Moody’s indicates it expects Murfreesboro’s fiscal outlook to remain sound because of continuing economic expansion driven by rapid, though slower-paced, population growth into the 2008-2009 fiscal year.
Murfreesboro doesn’t plan on issuing any bonds but will continue to use the Tennessee Municipal Bond Fund, which is a bond pool and doesn’t require a rating for access.
Moody’s contacted the city because of a reassessment of the TMBF, which was requested by Bank of America.
The city use of the TMBF has resulted in an interest rate averaging 2.60 percent over the last 10 years. The TMBF indicated that this has saved the City over $38 million in interest expense during that 10-year period.
Michelle Willard can be contacted at 615-869-0816 or mwillard@murfreesboropost.com.
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