TOWN OF ABINGDON
TOWN RECEIVES STRONG BOND RATINGS
In March of 2016 a town contingent including the Mayor, Vice Mayor, town administrative staff, and financial consultant Davenport & Company met with two (2) bonding agencies in New York for the purpose of seeking a bond rating, more formally known as an Issuer Credit Rating (ICR). The town met with Moody’s Investors Service and Standard and Poors with the express purpose of obtaining a bond rating which would support the town’s position for the borrowing of capital funds for a major economic development project. The town is pleased to report that Moody’s Investors Services has assigned the town with an Aa3 rating and the Credit Opinion letter stated the following to support this strong rating:
“The Aa3 rating incorporates the town’s modestly-sized tax base, stable tourism, and agriculture based local economy, average resident wealth levels, strong reserves and liquidity supported by conservative fiscal management, and manageable debt and pension burdens. The town’s credit strengths include a strong financial position, conservative fiscal management, and improving socioeconomic profile”. In addition, the report stated “The town’s financial position will likely remain strong given management’s commitment to conservative budgeting and the use of reserves only for one-time purposes.”
The Town received an even stronger rating of AA from Standard and Poor’s whose Credit Opinion letter stated the following:
“The outlook is stable . . . the rating reflects the town’s adequate economy with projected per capita effective buying income at 95.4% of the national level; Strong management, with good financial policies and practices under our Financial Management Assessment methodology; Very strong budgetary flexibility with an available fund balance in fiscal 2015 of 39% of operating expenditures; Very strong liquidity, with total government available cash at 62.4% of total governmental fund expenditures and 16.2x governmental debt service; Very strong debt and contingent liability position”.
What do these ratings mean? According to the Credit Ratings Chart both ratings are in the Prime / High Grade Level and “an obligor has a VERY STRONG capacity to meet its financial commitments. It differs from the highest-rated obligors only to a small degree”. It is important to note that the Moody’s rating of Aa3 is strong but the rating assigned by Standard and Poore’s is a level stronger and reinforces the fiscal soundness of the town and its ability to borrow capital funds for a major economic development project. The town Council and staff look forward to seeing Abingdon grow and prosper in the coming months/years while maintaining a strong financial position that will benefit generations to come.
According to Town Manager, Greg Kelly, these ratings are as high as a locality can attain given the population and tax base that Abingdon has and exemplify the town’s strong financial position. The town’s current debt levels are extremely low and its borrowing capacity is extremely high. Kelly further states that the town’s net worth has continued to grow over the past ten (10) years which demonstrates that any reserve funds that have been spent have been put into capital improvement projects which have extremely enhanced both the town’s net worth, its quality of life and overall social equity.