S&P Global Rating Services announced today that it raised its long-term and underlying ratings on Montclair Township's existing general obligation (GO) debt to “AAA” – the highest issuer credit rating the financial services company assigns. The rating represents an upgrade from the AA+ the company issued the Township in 2014.
S&P’s report cites Montclair’s ability to “consistently achieve stable financial performance supporting its very strong liquidity and strong budgetary performance and flexibility.”
The company also assigned a “AAA” long-term rating and underlying rating on the Township’s existing GO debt and stated that the outlook on all of the Township’s ratings is stable.
“This new rating increase places Montclair in the ranks of the top communities nationwide for credit worthiness and fiscal management,” said Mayor Robert Jackson. “It is an affirmation of the hard work and responsible management of taxpayers’ finances through efficient and effective fiscal policies set in place from the very beginning of this Council’s tenure. “I am truly grateful to S&P for this unprecedented vote of confidence in the Township of Montclair. My Council colleagues, Manager Stafford, CFO Rao, and Township staff deserve the credit; I'm proud of them.”
Only 3% of New Jersey’s 565 municipalities have the “AAA” rating. The current increase marks the third upgrade of the Township’s rating since 2012.
According to the report, the “AAA” GO rating reflects S&P’s assessment of the following credit factors, specifically the Township’s:
·Very strong economy, with access to a broad and diverse metropolitan statistical area (MSA);
·Strong management, with "good" financial policies and practices under S&P’s financial management assessment (FMA) methodology;
·Strong budgetary performance, with an operating surplus in the general fund in fiscal 2015;
·Strong budgetary flexibility, with an available fund balance in fiscal 2015 at 11.0% of operating expenditures;
·Very strong liquidity, with total government available cash at 28.2% of general fund expenditures and 2.7x governmental debt service, as well as access to external liquidity S&P considers strong;
· Strong debt and contingent liability position, with debt service carrying charges at 10.5% of expenditures, net direct debt at 88.5% of general fund revenue, and low overall net debt at less than 3% of market value and rapid amortization, with 78.4% of debt scheduled to be retired in 10 years; and
· Strong institutional framework score.
“The AAA rating is the testament to policies put in place by the governing body to place the township on a solid financial footing for now -- and for the long term,” said acting Township Manager Timothy Stafford. “It reaffirms the efficacy of Council’s continued focus on making smart financial decisions which help strengthen the local economy, making the community a desirable place to live, work and do business.”
The full S&P Global Rating Services report is available for download here http://orl.me/wU3itK.
