In advance of a planned $115 million bond sale next week, Harford County has received Triple-A credit ratings, in spite of its debt load, from three national rating agencies.
The office of Harford County Executive Barry Glassman said the bonds are rated AAA by Standard & Poor's, Aaa by Moody's Investors Service and AAA by Fitch Ratings, the top grade from all three.
The bond sale, scheduled for April 7, includes $45 million in new borrowing and $70 million to refund earlier bonds at lower interest rates. The sale will be held electronically.
The latest ratings are identical to those the county received a year ago, when it sold $40 million in 20-year consolidated improvement bonds at an average interest rate of 3.0465 percent. With national bond indexes showing current yields around 2.65 percent, however, Harford will most likely pay a lower rate this year.
Glassman said he is "pleased" by the continued Triple-A ratings.
"These highest possible ratings by Moody's, Standard & Poor's and Fitch will keep borrowing costs low when the county sells bonds to pay for capital projects," he said in a statement. "While noting the challenges of accumulated debt and declining reserves facing my new administration, Moody's cited 'proactive management and comprehensive fiscal policies' in its decision. Standard & Poor's cited 'very strong management' and Fitch noted the county's adherence to 'conservative debt management guidelines.'"
"Not only do these ratings affirm our fiscal management plan, they are a reflection on our county employees who work with integrity and diligence in service of our customers, the citizens of Harford County," he said.
According to Harford's Comprehensive Annual Financial Report for the 2013-14 fiscal year that ended last June 30, the county owed approximately $869 million in principal and interest on its long-term debt, which increased by more than $500 million during the nine and a half year administration of former county executive David Craig, whom Glassman succeeded Dec. 1.
The county has also dealt with financial headwinds from slow revenue growth, mainly because of a protracted home-building slump, which has in turn caused it to dip into its cash reserve to balance recent budgets, as Glassman said was noted by Moody's, making it all that more remarkable the bond ratings remained at the highest level.
Since taking office, Glassman has canceled several new building projects and is in the midst of restructuring and reducing the county government's workforce through retirement incentives and outsourcing. He said earlier that all of this year's new borrowing would be for projects already started and, in many cases, completed or nearly so, also noting that continued low interest rates in the municipal bond market made such borrowing prudent.
The new bonds expected to be sold next week carry a 20-year serial maturity. Among the uses for the money are: $8.5 million for the new emergency services building that opened late last year, $5.5 million for Harford Community College's applied health and nursing building that is also in use, $7 million for the 700 MHz regional emergency radio band that became operational this year, $2.3 million for the H-MAN high speed data system for public buildings and schools, $3.8 million for the Youth's Benefit Elementary School replacement building under construction, $2.1 million for heating and cooling system replacement at Magnolia Middle School and $1.2 million for the Havre de Grace library replacement building also under construction.
The $70 million being refunded is owed on a $120 million bond issue the county sold in 2009 at average interest rates between 4 and 5 percent. County officials say they believe they will save $6 million to $7 million from the refunding. The refunding bonds carry a 15-year serial maturity.
Two years ago, the county refunded $74.7 million at an average interest rate of 1.956 percent. In the same sale, $40 million in new general obligation bonds brought an interest rate of 2.515, when the county's credit rating was slightly lower than it is now. At the time, officials said both rates in 2013 were multi-generational lows.
Unfavorable market conditions were cited when the interest rate on last year's bond sale came in more than half a point higher than the 2013 sale.