For the second time in a month, top bond rating agencies have assigned significantly improved credit ratings to Stockton Public Financing Authority Wastewater System Revenue Refunding Bonds. Fitch and Standard & Poors (S&P) have assigned a credit rating of ‘A-‘ with an outlook of “Stable,” up from a prior rating by S&P on the original 1998 and 2003 series bonds of BBB-.
“We are very pleased with the new ratings and the recognition by the ratings agencies that Stockton has remained steadfast in maintaining its solid footing with respect to its enterprise services,” said City Manager Kurt Wilson. “Investors and rating agencies have recognized that these services are supported by restricted funds and that the City has managed its finances responsibly.”
>The City of Stockton originally issued bonds in 1998 and 2003 to fund wastewater
System projects. With approval of the Stockton City Council, both series will be combined and reissued in a 2014 issue of approximately $79.4 million.
“We are going to basically refinance those bonds, sort of like refinance your home mortgage,” said Connie Cochran, Public Information Officer.
She says because of the improved credit rating, the city will not get an improved interest rate, and will cost the city less money when it comes to borrowing money.
“It’s very exciting because it shows that our bonds are marketable,” she added.
The agencies reviewed the City’s financial performance, cash balances, future debt needs, and area of service to determine the new credit ratings. In addition, the agencies took into account the impact of the recent recession on the local economy and the need to improve the wastewater system in the near future.
An improved credit rating allows the City to save money, as interest rates and the cost of borrowing are lower with the improved ratings.
The wastewater system and debt associated with projects and improvements are funded through rates paid by those connected to the system. These funds are special, restricted funds and are not part of the City’s General Fund and, therefore, not impacted by Stockton’s bankruptcy.
For information about the City of Stockton and its Municipal Utilities Department, visit www.stocktongov.com/mud.