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08/15/2018 08:00 AMBoth S&P Global Ratings and Fitch Ratings recently announced the Town of Guilford maintains its AAA bond rating and has a stable fiscal outlook going forward. While maintaining the highest bond rating is a good thing on its own, the Board of Selectmen (BOS) recently discussed what that rating means for bonding and interest costs.
Town Finance Director Maryjane Malavasi said this rating helps ensure the town gets the best interest rate when it goes out to bond, which earlier this month were sold at a rate of less than three percent.
“We did have our two rating agencies calls and spoke with them and they re-affirmed out AAA rating for our bonds,” she said. “With our bond anticipation notes, we did receive the highest rating possible on both of those, which according to our financial advisor saved us about $142,000 in interest costs thanks to those bond ratings.”
Malavasi said these results show rating agencies have a good deal of confidence in Guilford’s financial practices.
“I think the bottom line is the agencies feel Guilford has done a good job of having the resources available to cover the payments for the bonds and that is really all they are worried about,” she said. “They are here to rate our ability to pay back the money.”
According to a press release, S&P described “the town’s favorable wealth and income levels and the diverse and dynamic local and regional economies” as providing support for the rating. Fitch’s listed Guilford’s “solid operating performance,” “wealthy property tax base,” and “well-funded pension plans” as key rating drivers.
“They mentioned our pensions being funded at appropriate levels, which is very important to this board, and they also mentioned our relatively low reliance on state funding which was interesting,” said Selectman Sue Renner.
In conjunction with the ratings, on Aug. 1 the Town of Guilford sold $12 million in long-term bonds and $3.2 million in short-term bond anticipation notes through a competitive bid process. The bonds were purchased by a syndicate led by Citigroup at an effective interest rate of 2.926 percent, according to the town.
According to the town, proceeds of the $12 million bonds and $550,000 of the notes will be used to finance various town infrastructure and board of education improvement projects. Approximately $2.6 million on the notes will be used to finance the town’s portion of the new high school.
BOS members asked Malavasi if this is the end of the bonds on the high school; Malavasi said not quite.
“Part of the high school is in a bond anticipation note, because most of that we are hoping to get back through our final payment from the state,” she said. “We don’t want to bond that yet until we really know exactly what we have left.”