The City of Lynchburg received excellent news during its recent reaffirmation of bond ratings. All three of the major bond rating agencies, Moody’s Investors Service (Aa2), Fitch (AA+) and Standard and Poor’s (AA+), reaffirmed the City’s bond ratings, citing 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:
Revenue have been rising at a pace near the rate of inflation and below U. S. GDP growth. Fitch expects growth to generally exceed inflation after an interruption due to the coronavirus pandemic, reflecting continued population growth above the national average and ongoing economic development activity. The City enjoys strong revenue flexibility.
Strong Financial Position
The City anchors the broad four-county region where its sizable health care, education and manufacturing sectors provide employment stability. Additional economic development, which has not been delayed, postponed or cancelled, continues both in the downtown area and elsewhere and lends stability to the rating. The City’s historically strong financial position, which we believe will remain strong through the pandemic and recession, has been guided by a conservative and well-seasoned staff coupled with many formal fiscal policies further solidifies the strong rating.
Very Strong Management
The rating reflects very strong management and financial policies and practices. Strong budgetary performance with operating results that could improve in the near term relative to fiscal year 2019 which closed with operating surpluses in the general fund; very strong liquidity; very strong institutional framework.
“This is especially great news given the state of the uncertain economy we are experiencing,” said Interim City Manager Reid Wodicka. “We are very pleased all three agencies have reaffirmed the City’s excellent bond rating.”
The City’s Chief Financial Officer, Donna Witt said that having a strong financial position made it possible to receive excellent interest rates when the City went to the bond market last month. “The City received four bids, with Jefferies, LLC submitting the winning bid with a True Interest Cost (TIC) of 0.805074%. This will result in approximately $2.8 million in interest savings over the remaining life of the bonds,” said Witt.