Rating agencies Moody’s and Standard & Poors have both reaffirmed the Town of West Hartford’s top rating for an upcoming bond offering, but Moody’s has kept the negative outlook assigned in October.
By Ronni Newton
West Hartford’s Chief Financial Officer Peter Privitera confirmed Friday that both Moody’s and Standard & Poors have reaffirmed the town’s AAA rating, a rating the town has maintained since the 1970s, but Moody’s did not remove the negative outlook it assigned in October amidst the state budget impasse.
Standard & Poors has maintained a stable outlook for West Hartford along with its top rating. Standard & Poors uses “AAA” while Moody’s uses “Aaa” but both denote a top rating.
The town received the ratings in advance of a plan to sell $13 million of general obligation bonds on Jan. 11, 2018, Privitera said. Bonds are used to finance projects such as road construction and capital improvements to school buildings.
Privitera and other town officials recently gave a presentation to the rating agencies in advance of the offering. The negative outlook assigned by Moody’s should not prevent the town from receiving an excellent interest rate, “roughly the same rate” as with a stable outlook, Privitera said.
“They think West Hartford is a very well-managed town financially, very conservative,” Privitera said of Moody’s. But concerns are primarily related to things that are not within the town’s control.
“One of their concerns is how the state’s fiscal uncertainly might affect us,” Privitera said of Moody’s.
Recent actions by the town – adding $3.2 million to the unrestricted fund balance and reducing the discount rate for the calculation of pension liabilities were seen as positive moves by the rating agencies, he said, by Moody’s still has concerns with factors that are out of the town’s control. “We’re going in the right direction, but we don’t know what the state is doing,” Privitera said.
In a narrative that accompanied the rating, Moody’s noted: “The Aaa long-term rating reflects West Hartford’s robust economy and sizable tax base, favorably located just outside the state capital. The rating also incorporates the town’s historically stable financial position with adequate overall reserve levels. Further, the rating factors in the town’s above average wealth and income levels, manageable pension and OPEB liabilities, and slightly elevated debt burden with rapid principal retirement.”
Privitera said that Moody’s recognized that the moves he recommended and that were approved by the Town Council on Dec. 12 were seen as positives, but cautioned that if the town does not continue to add to its fund balance and bring its discount rate down, there may be a problem with the future rating. Moody’s included the following comment in its narrative: “The negative outlook reflects the expectation that the town will remain challenged to maintain or increase financial reserves, which are already below the median for Aaa rated cities and towns, due to ongoing fiscal pressure at the state level.”
“We’re still triple-A, but Moody’s is just looking or us to make some changes, and we’re making the changes that we have control over,” Privitera said.
Moody’s assigned a negative outlook to a total of 29 Connecticut municipalities and school districts in October. Privitera said he doesn’t know if any of those entities have had the outlook amended.
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