Standard & Poor’s Ratings Services nudged Groton’s bond rating upwards a notch from AA+ to AAA, the company’s highest rating, on July 11. The change should save the town an estimated $182,000 over the life of a new series of bonds worth $3.8M that the Board of Selectmen voted to issue during its meeting on July 14, according to Treasurer Mike Hartnett.
Town Manager Mark Haddad told selectmen during their meeting that a report by Standard & Poor’s notified the town that S&P had raised its rating on the town of Groton’s general obligation debt to AAA. Standard & Poor’s last reviewed and boosted the town’s ratings in April 2013, from AA to AA+.
Hartnett explained in an email that, “One of the benefits to holding a AAA municipal credit rating is oftentimes reflected in more favorable borrowing terms, which is evidenced by the winning low bid of 2.4% for the $3,860,000 bond issue.”
The bond issue included:
- $2,000,000 partial construction cost (total project was $4,000,000) for the new GELD facility on Station Ave.
- $1,200,000 Gibbett Hill Land Acquisition — Refinance from 2003 Bond Issue
- $585,000 Lost Lake Fire Station — Refinance from 2003 Bond Issue
- $75,000 Fire Truck — Refinance from 2003 Bond Issue
According to Hartnett, “In terms of direct savings, the budgetary savings to the Town over the term of the refunded bonds is approximately $182,000. GELD’s savings is approximately $40,000 in lower interest costs versus the rate that would have applied if the Town did not get upgraded to AAA.”
According to Standard & Poor’s, the Groton-Dunstable Regional School District’s Rating remains at AA-, two notches below the town’s. The Groton School’s rating is AA+.
What does a AAA rating mean?
|AAA||An obligation rated 'AAA' has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong.|
|AA||An obligation rated 'AA' differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong.|
Haddad told selectmen that the S&P report cited a number of reasons for the increase, including the strong local economy, the town’s budgetary flexibility with good reserves and operating surpluses, the town’s strong management conditions and financial policies, low overall debt, it’s 99 percent tax collection rate, and low reliance on state aid to fund programs. Related