The City of Biddeford’s bond rating was upgraded by S&P Global Ratings to AA and Moody’s Investors Service to AA3 this month. The City’s outlook is considered “stable”.
Ratings are published by credit rating agencies such as Moody’s and S&P and used by investment professionals to assess the likelihood the debt will be repaid. They can also potentially allow a local government to borrow at lower interest rates, saving its taxpayers' money over the life of the bonds. The City is expected to see a 0.15% to 0.25% lower interest rate on bonds with a high grade rating.
S&P Global Ratings also raised its long-term rating to AA from AA- on the City’s previously issued general obligation bonds. At the same time, S&P Global Ratings assigned its AA long-term rating to the city's $12.5 million series 2022 general obligation bonds. An AA rating from S&P is the third highest rating on its scale.
S&P stated that the rating reflects the City's growing market values and conservative budgeting practices, which have enabled it to restore fund balances and resume adherence to the City's reserve policy while reducing debt. The rating also reflects their opinion of the City’s:
- Growing economic base near Portland;
- Adequate management, supported by a strong institutional framework;
- Recent surpluses that have led to an improved reserve position; and
- Improving debt profile and manageable fixed costs.
Moody’s Investors Service has upgraded the City of Biddeford's outstanding general obligation limited tax (GOLT) bonds to Aa3 from A1 rating. Additionally, Moody's has upgraded the city's issuer rating to Aa3 from A1 and assigned a Aa3 rating to the city's $12.5 million 2022 General Obligation Bonds.
The upgrade of the issuer rating to Aa3 reflects the city's improved financial position after several years of consecutive operating surpluses, according to a report from Moody’s. Additionally, the upgrade reflects the City's recent elimination of an interfund loan payable between the General Fund and Wastewater Fund.
An Aa3 rating from Moody’s is the fourth highest rating on its scale. The agency’s rating chart shows an entity with an Aa rating means its debt and financial obligations are “judged to be of high quality and are subject to very low credit risk.”
“Biddeford residents should be very pleased to see this upgrade to our bond rating,” said Mayor Alan Casavant. “These upgrades reflect a strong financial position for the City and will allow us to borrow more affordably.”
Moody's Investors Service Announcement
S&P Global Ratings Announcement