City Receives Acclaimed Triple A Credit Rating from Fitch

Articles Finance 05-13-15

The City of Arlington received high marks for its financial strength following a review by the three major credit rating agencies in May.

For the first time, Fitch upgraded the City’s General Obligation debt to the highest possible rating: AAA. Standard & Poor’s gave Arlington a AAA rating in 2013.  Since then S&P has affirmed the AAA rating for 2014 and 2015. Moody’s also maintained its rating of Arlington at Aa1 which is one notch below its highest rating.

The City’s bond ratings have been improving steadily in recent years, as the attached chart indicates. The attached chart also includes the ratings for the City’s Water Utilities.

Fitch said that the higher rating reflects their opinion of:

  • The City’s strong financial performance, financial resilience and manageable long-term liabilities;
  • Arlington’s strong financial profile is supported by expenditure flexibility, a positive revenue trajectory, healthy reserves and ample liquidity; and,
  • The financial performance of the City of Arlington’s water and wastewater system is strong, characterized by solid debt service coverage (DCS) in excess of 2.5 times over the past five fiscal years.

Moody’s also designated a stable outlook for Arlington, citing the City’s improving economy and steady and capable management.

City Manager Trey Yelverton said that the ratings upgrade has been years in the making and will save the City and its taxpayers money.

“The higher credit rating allows the City of Arlington to hold down costs by borrowing money at lower interest rates for future projects,” Yelverton said.

Here is a look at the City of Arlington’s Ratings Reports:

Fitch – General Obligation

Fitch – Water and Waste Water System

Standard & Poor’s – General Obligation

Standard & Poor’s – Water and Wastewater System

Moody’s – General Obligation

Moody’s – Water and Wastewater System

2015 Fitch S&P Moody’s
General Obligation AAA AAA Aa1
Water & Wastewater AAA AAA Aa2

 

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Kim Feil
Guest
“…manageable long-term liabilities;” ?? I would say that it is reasonable to disagree as about 50 swath’s of land and the adjacent properties where we have drill sites is not a manageable long-term liability. With Chesapeake, our main driller, having written down $5billion recently, and with HB40 effectively voiding our ordinances for local control which could mean we may not be able to charge or collect the fee per well that goes to our emergency preparedness to respond to emergency events at these drill sites which become more accident prone as the infrastructures age. But hey who am I to… Read more »
Will Merritt
Guest

Any indication on how much the city will save in interest costs on their debt because of the higher rating (lower borrowing costs, lower interest rates)?

Ryan Hunt
Admin
Hi Will, The difference between a AA and a AAA rating can be $6-700,000 over 20 years on a $20,000,000 issuance. Arlington was already in possession of one AAA from Standard and Poor’s rating agency. This upgrade was from Fitch’s AA+ to AAA, while our Moody’s rating stayed at Aa1 (AA+). Because of the split rating, and strength of the rating, it is difficult to determine what a one notch upgrade on 1 of 3 already high ratings has. However, it is a strong indication of the strength of Arlington’s financial capability, and the relationship between high ratings and lower… Read more »
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