Cumberland Times-News

March 10, 2013

To Allegany County, bond rating upgrade means financial stability

Matthew Bieniek
Cumberland Times-News

— CUMBERLAND — Allegany County has received another bond rating upgrade and interest in the bonds the county plans to sell is strong, county officials said.

“We have seven offers,” said County Finance Director Jason Bennett at last week’s regular county commission business meeting. Bennett was telling commissioners about interest in a taxable bond issue that is part of the county’s refinancing program. Most of the refinancing will deal in tax-exempt bonds, Bennett said.

At the same meeting, County Commission President Michael McKay announced that Standard & Poor’s (S&P) Rating Services had increased the county’s bond rating. The county’s rating with S&P was upgraded from an A to A+.

The upgrade could save the county as much as $250,000 on debt refinancing, McKay said.

“To the casual observer, this slight increase in rating may not appear significant, but to government bond traders it means the county will be paying less interest on money it borrows both short and long term,” said Bennett. “Similar to the assessment provided by Moody’s earlier in the week, the upgrade reflects S&P’s acknowledgment that the county’s financial outlook is stable,” Bennett said.

Moody’s upgraded the county from A1 to Aa3, a move that could save a quarter of a percent on interest rates.

Moody’s and S&P are the two most prestigious bond-rating companies in the world.

County commissioners were quick to take note of the change.

“At a time when financial forecasts aren’t revealing many positive signs across the country, it’s a good feeling for us here in Allegany County to be recognized by the rating agencies for simply doing our best to run the county like a business,” said County Commissioner Bill Valentine.  

Commissioners are refinancing part of the county’s debt by issuing bonds at a lower interest rate.

Commissioners approved a resolution to allow the refinancing to go forward Feb. 14.

The move will refinance various bond issues from 2001, 2004 and 2006, said Bennett.

The terms of the bonds will not be extended and bonds that paid for Mountain Ridge High School may actually be paid off earlier than initially planned.

While the financial issues are complex, the idea is simple: The county will issue new bonds at lower interest rates than the higher-rate bonds previously issued.

The rating upgrade followed a formal credit presentation made to the bond rating organizations last month in New York City by McKay, Bennett and County Administrator David A. Eberly.

“On behalf of the commissioners and county staff, we wish to acknowledge the support the county received from Davenport & Company, LLC, from their Towson and Richmond offices. Their professionals had us very well prepared for the rating process,” said Eberly.    

McKay praised both previous boards of commissioners and Jerry Frantz, the former county finance director, for keeping the county in good financial shape during tough times.

Contact Matthew Bieniek at mbieniek@times-news.com.