posted on September 21, 2011
By JIM LEUTE (Contact )
JANESVILLE — Two top bond-rating firms have put their stamp of approval on a $4.5 million borrowing plan for Rock County.
Ahead of the bond issue, Rock County presented its case to both Standard & Poor's and Moody's Investors Service that the county has a stable, growing economy that's highly capable of servicing bond debt.
Here are five things to know about the ratings.
1. Why is the county borrowing money? The county plans to issue general obligation promissory notes later this year to pay for a variety of capital projects. They include boilers at the Health Care Complex, design work on the Rock Haven building project, airport improvements and land acquisition, highway construction, 911 center capital equipment and information technology capital projects.
2. What did S&P say about the issue? Standard & Poor's rated the upcoming bond issue as "AA/stable," which means the county has a strong capacity to meet financial commitments. The rating is two notches below the company's top rating.
S&P based its rating on what it perceives to be the county's diversifying economic base, economic indicators that range from good to strong, a strong fund balance governed by good financial management and moderate debt levels.
3. What did Moody's say? Moody's gave it a rating of "Aa1." That's one notch below the top spot.
The company based its rating on the county's sizeable tax base, healthy general fund balance and sound financial management.
Moody's did note that the county faces challenges of a declining value in its tax bases, as well as reductions in state aid.
4. Have the county's ratings changed recently. No. Both ratings are affirmations of those the two companies assigned to last year's $5.8 million bond issue, the proceeds of which paid for road constructions projects and part of the Rock Haven building project.
5. Why should I care? When the county enters the bond market to finance debt, the buyers look at the strength of the issuer. That is, a stable and growing local economy has a stronger likelihood of servicing the bond debt. Similar to a personal or business loan, the bond buyers as lenders need to be assured that their exposure is not only covered but that there's a sufficient level of return on their investment.
A favorable bond rating means lower interest rates. Lower interest rates mean lower debt service costs for Rock County taxpayers.
"Considering the environment, these ratings speak volumes about Rock County's fiscal and economic health," said James Otterstein, the county's economic development manager.