June 13, 2018
Standard & Poor’s (S&P) rating agency, for the sixth year, has again affirmed the City’s long-term rating of “AAA,” the highest obtainable rating. S&P weighs a host of financial, economic, debt and managerial information in order to assess the City’s performance.
In the rating report, S&P cited the City’s very strong economy, very strong management with strong policies and practices, strong budgetary performance, very strong budgetary flexibility, very strong liquidity, and strong debt and contingent liabilities position as positive credit factors. “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,” said S&P.
Due to outstanding bond ratings, the City continues to experience low interest rates when financing City capital projects. Finance Director Judie Belanger announced that the City received eight competitive bids from bond underwriters on Wednesday, June 6, 2018 for a $19,650,000 general obligation bond issue ranging from 10 to 20 years. Proceeds from the bond issuance will be used to finance Citywide street and sidewalk improvements, elementary school facility improvements, High School Athletic Field Lighting, water line replacement & improvements, and sewer line and pumping station improvements. Morgan Stanley & Co. LLC was the winning bidder on the bonds with a true interest cost rate of 2.68 percent. “In addition to the excellent bond rate, the City received a bond premium of $1.998 million which may be used for other capital projects with an equal or longer useful life of the issue,” Belanger said.
At the same time, the City issued a $22 million bond anticipation note. The winning bidder was J.P. Morgan Securities LLC with a net interest cost of 1.61 percent. “This is a short-term note to fund the construction of the Foundry Place Parking Facility prior to its opening. Permanent financing will take place in fiscal year 2019,” Belanger announced.
According to City Manager John Bohenko, the ongoing maintenance of the S&P rating represents the successful implementation of City policies that result in money saved and added opportunities to complete more infrastructure improvements. “The work of our City Council and strategic planning of City staff have enabled Portsmouth’s AAA rating over several years now. I am pleased we can continue to use this opportunity to execute more City enhancements for our residents.”