Oct. 24, 2011
Agencies reaffirm King County’s high credit ratings ahead of bond sale
Standard and Poor’s and Fitch Ratings both cite strong financial management practices in reports
Two national credit ratings agencies have reaffirmed King County's high marks ahead of a planned $21 million bond sale expected to go to market on November 7.
Standard and Poor's assigned an "AAA" long-term rating to the upcoming $21 million limited tax general obligation (LTGO) bond issuance, and reaffirmed its "AAA" long-term rating on the County's previously issued LTGO bonds. In addition, Standard and Poor's said the outlook on all of the County's credit ratings are stable, despite the lingering effects of the global economic downturn. In assigning the ratings, Standard and Poor's took note of the County's success in lowering employee health care costs through programs such as Healthy Incentives.
In its report, Fitch Ratings said its rating was based on the County's "commitment to long-term planning, council-adopted financial management policies, and low debt burden." The agency assigned an "AA+" rating to the upcoming $21 million LTGO bond issuance, and reaffirmed an "AAA" rating on $186 million of outstanding unlimited tax general obligation (ULTGO) bonds, as well as an "AA+" rating on $1.6 billion in outstanding LTGO bonds.
The bond sale will replace the temporary financing the County obtained to pay for flood prevention and mitigation efforts in the Green River Valley. The ratings, formally announced late last week, assign a credit rating to the upcoming sale of the new bonds and additionally reaffirm the rating of previously issued bonds.
Higher credit ratings allow the County to borrow money for projects at lower interest rates. The reaffirmed ratings mean that King County will be able to achieve an interest rate on the new bonds of at least 0.20 percent less than other comparable government borrowers with a credit rating that is one step lower, and achieve a rate that is 0.75 percent less for the same borrowers with a credit rating that is two steps lower than King County's. Based on today's interest rates for municipal bonds, this will result in a savings of between $200,000 and $800,000 over the life of the bonds.