Pelham receives top bond credit rating
Published 11:05 am Monday, July 28, 2014
By MOLLY DAVIDSON / Staff Writer
PELHAM—After months of work and sending information, Pelham received an AAA long-term bond credit rating, the highest long-term rating, from the New York City-based financial services firm Standard and Poor’s.
The AAA rating was given based on the assessment of several factors. In a report, Standard and Poor’s noted Pelham’s strong economy, “very strong” budgetary flexibility and performance and “very strong” liquidity, meaning “we have a lot of cash in the bank to take care of day-to-day needs,” Pelham Finance Director Tom Seale explained.
The city’s work to compile and formalize financial policies also paid off, as Standard and Poor’s highlighted Pelham’s strong financial management and policies as a key factor in the highest AAA rating.
“This is the first time we’ve ever had a bond rating,” Seale said, adding in the past the city had taken out bond insurance.
The process to receive the rating was extensive and the city sent “reams and reams of financial information” since March, Seale said.
Pelham is one of only four cities in Alabama to receive an AAA bond credit rating, the other three are Huntsville, Mountain Brook and Hoover. Additionally, Pelham’s AAA rating is higher than that of the state of Alabama and the United States government, Seale noted.
“It’s very similar to a personal credit report,” Seale explained, adding the AAA rating will allow Pelham to “borrow at a lower rate,” saving “hundreds of thousands of dollars.”
Seale said Pelham is looking to take out a $35 million bond issue to be paid back over 20 years.
“All of the money will be used for the school system,” Seale said. The $35 million will go to building new facilities and improving existing buildings, he explained.
The AAA bond credit rating will also help the city to secure low rates if bonds are needed to fund future municipal projects, Seale said.
“Everyone should be very pleased,” Seale wrote in a statement of the AAA bond credit rating. “It’s been a lot of hard work and dedication from current and past mayors, city councils and employees to obtain this rating.”