City of Portsmouth Completes Successful Bond Sale With 11th Consecutive AAA Rating from Standard & Poor’s

June 8, 2022

The City of Portsmouth has completed the sale of $23,330,000 in 20-year general obligation bonds to fund approved General, Water and Sewer Fund projects.

The City’s Finance Director Judith Belanger received competitive bids from ten bond underwriters through City’s Financial Advisor, Hilltop Securities Inc. in Boston MA. Morgan Stanley & Co., LLC was the winning bidder, committing to a net interest rate of 3.083 percent and a bond premium of $1,951,365.

The City also received eight competitive bids on a $10,423,820 360-day bond anticipation note issue. Jefferies LLC was the winning bidder with a net interest rate of 1.765 percent.

Prior to the sale, the municipal bond credit rating agency Standard & Poor’s issued the eleventh consecutive affirmation of its AAA rating of the City’s ability to manage its credit, citing its “very strong management with strong financial policies and practices.”

In making the announcements, City Manager Karen Conard said, “With a AAA rating since 2013, Portsmouth continues to hold a strong reputation for investment by those who subscribe to the bonds by which the City funds its major capital improvements. The City benefitted from very close competitive bidding on this issue, thanks to Standard & Poor’s affirmation of our financial strength and the local economy. That rating ultimately saves taxpayers hundreds of thousands of dollars while also allowing us to move forward with the capital investments they expect.”

In awarding the AAA rating, Standard & Poor’s report commented, “Management is conservative when arriving at revenue and expenditure assumptions and it incorporates historical trends when formulating the budget. Portsmouth regularly monitors budget-to-actual results and provides monthly reports to the City Council. Portsmouth's credit profile is underpinned by the city's strong management team and longstanding financial policies and practices, which continue to support its positive operating performance and very strong reserve levels as it recovers from the pandemic.”

Additionally, Standard & Poor’s reported, “The 'AAA' long-term rating reflects our opinion of the city's strong coastal economy; proficient management with well-embedded formalized policies and practices; budgetary performance reflecting the city's breakeven operating results, bolstered by robust reserve levels; and adequate debt and contingent liability profile.”

Commenting that the City’s AAA Bond Rating is higher than that of the nation, Standard & Poor’s analysts said, “We rate the city higher than the nation because we believe Portsmouth can maintain better credit characteristics than the nation in a stress scenario based on its predominantly locally-derived revenue base, and our view that pledged revenue supporting debt service on the bonds is at limited risk of negative sovereign intervention.”