Dec. 7, 2011
Moody’s restores King County's “stable” bond outlook, reaffirms high credit rating
Decision by Moody’s protects county from potential federal government credit downgrade
Moody's Investor's Service today reaffirmed the county's high bond ratings and restored the outlook for King County bonds to "stable." The decision by the credit rating agency would effectively shield the county from the effect of a possible Moody's downgrade to the federal government's credit rating.
"We can be proud of today's decision by Moody's, because it recognizes our prudent management to create efficiencies, set aside savings, and partner with our employees to reduce costs," said King County Executive Dow Constantine.
In addition, Standard and Poor's, another credit rating agency, assigned a "AAA" long-term rating to the county's upcoming limited-tax general obligation (LTGO) Series 2011D bonds, and reaffirmed its "AAA" long-term rating on the county's previously issued General Obligation (GO) bonds. In its analysis, Standard and Poor's cited the county's strong financial management and willingness to make necessary budget adjustments. A third agency, Fitch Ratings, also listed King County's bond outlook as "stable," and reaffirmed its high marks for nearly $1.8 billion worth of outstanding bonds.
High credit ratings allow the county to borrow money for projects at a lower cost to taxpayers. By achieving the highest credit rating, King County will be able to obtain an interest rate on its long-term borrowings of at least 0.20 percent less than comparable government borrowers with a credit rating just one category lower, and .80 percent lower for borrowers with a credit rating two levels below King County's.
Moody's assigned negative outlooks to King County and other governments on August 4, following the August 2 confirmation of the U.S. government's Aaa sovereign rating and assignment of a negative outlook. That sovereign rating action concluded a review for possible downgrade that Moody's had initiated on July 13.
The ratings and outlooks issued by the various credit agencies come ahead of the county's planned $20 million bond sale on December 12. Most of those funds will be used to purchase 250 acres of Maury Island shoreline and protect it from future development.