Moody’s Investors Service has upgraded to Aa1 from Aa2 the rating on the Town of Garner’s $29.3 million in outstanding general obligation bonds, the company announced on April 17. The upgrade could help the Town obtain better interest rates and terms for future borrowings and bond issuances.
“The upgrade to Aa1 is based on the town’s consistently strong financial position bolstered by conservative fiscal policies, a growing tax base benefitting from its proximity to the City of Raleigh, and manageable debt and pension burdens,” Moody’s said.
The bond credit rating company also cited Garner’s maintenance of a strong liquidity and reserve position and below-average unemployment levels. Moody’s added that Garner “will likely experience continued growth driven by ongoing residential and commercial development.”
“The upgraded Moody’s general obligation bond rating is a positive achievement for the Town and speaks to our credit worthiness,” Town Manager Rodney Dickerson said. “Although there are no guarantees, the Aa1 upgrade could yield better interest rates and terms for future borrowings and bond issuances. I commend the Town Council and staff for our fiscal policies and for putting us in a position to be upgraded.”
Moody’s lauded the Town’s high level of fund balance, or reserves. “The town has maintained consistently high General Fund balance at levels well above the national medians for the Aa1 rating category, averaging 86.5% of revenues during the last five fiscal years (ending June 30, 2016),” the company said. The Town has added to fund balance in four of the last five fiscal years, Moody’s noted.
The firm also observed that “the town’s management team is solid and has been able to produce consistently balanced operations over a sustained period.”
Moody’s said Garner’s “debt burden is expected to remain manageable given modest future debt plans, continued tax base growth, and adherence to formal debt policies.”
As noted by Moody’s, the Town’s future debt plans include issuance of the remaining $11.2 million in general obligation bonds from the 2013 bond referendum. The issuances are expected to occur in two installments: $4 million in the next 12 to 18 months and $7.2 million in the next 18 to 36 months.
The Town’s credit rating with Standard & Poor’s Ratings Services was upgraded from AA to AA+ in late 2013.
To view the Town’s financial documents, please visit the Finance Department’s main page.