The City of Lynchburg’s bond ratings have been reaffirmed by all three major rating agencies, (Moody’s: Aa2; Standard and Poor’s: AA+; Fitch: AA+). Each rating agency noted strong financial management and strong operating results.
These ratings contributed to the City being able to sell $ $49,425,000 in both new money and a refunding of Series 2018 Bond Anticipation Note at a very favorable interest rate of 2.27% (TIC). There were nine bidders with the winning bid to R.W. Baird & Co. Inc. The bonds will be used to finance various water, sewer, transportation and economic development projects.
All three rating agencies made note of the City’s strong management with strong financial policies and practices.
For a city, a bond rating is equivalent to a credit rating for an individual and is based on its credit worthiness or ability to meet its financial obligations. According to the credit rating reports, the City’s bond rating was affirmed due to several factors. In summary, the findings are as follows:
Strong Revenue and Expenditure Control
“The rating reflects the city’s strong control of revenues and expenditures, as well as its strong budget management and healthy reserves. The city’s long-term liability burden is manageable.” - Fitch
Strong Budgetary Performance
“In our opinion, the rating reflects the city’s adequate economy with a local stabilizing institutional influence, very strong management with strong financial policies and practices, strong budgetary performance and flexibility, very strong liquidity and a very strong institutional framework.” - Standard and Poor’s
Economy and Tax Base: Regionally Important Local Economy Continues to Benefit from Diversification and Strong Institutional Presence
“The city’s credit strength is attributed to strong operating results driven by conservative management, a sizable tax base stabilized by institutional presence and manageable fixed costs. The city’s financial position is healthy and has remained stable for several years, and operating surpluses have supported one-time capital projects.” - Moody’s
“We are very pleased that all three bond rating agencies have reaffirmed the City’s excellent bond rating,” said City Manager, Bonnie Svrcek. “We were able to receive a low interest rate of 2.27% because of City Council’s commitment to strong financial management as well as the committed team of City employees who work tirelessly every day to make Lynchburg a great place to live and visit. Most importantly, it means we will be able to take care of major infrastructure projects at a long term saving for our citizens. I am extraordinarily proud of the effort by the City’s financial team in adapting quickly to take advantage of the current bond market.”