News Column

Agencies give highest bond ratings in county's history

July 9, 2014

By Ed Waters Jr., The Frederick News-Post, Md.

July 09--Frederick County has received the highest bond ratings from three agencies in the county's history.

Fitch Ratings gave the county an AAA with a stable outlook; Moody's Investors, Aa1 with a stable outlook, and Standard & Poor's, AAA with a stable outlook.

The rating agencies looked at the Board of County Commissioners' adoption of a balanced budget, management of the county's pension and other post-employment benefits funds, efforts to reduce fees and taxes and other initiatives.

"We made a lot of tough decisions," Commissioners President Blaine Young said in a telephone interview Tuesday. "It is a testimony of what we have done, despite critics."

The ratings put Frederick County in the upper third of Maryland counties, Young said, in financial stability.

"People ask what the ratings mean. It's like a credit score, the better the ratings, the better the score. It can save millions for the county," Young said.

Financial professional Chris Murray agreed.

"It means better interest rates for the county, better financial deals for infrastructure on loans," Murray, of Murray Financial Group, said in a telephone interview.

"It is especially good for the county in this climate of a sluggish economy, tax revenue is down and we don't have full employment," Murray said.

The rating is also good for the investor, whether a pension fund or individual investor, seeking a more secure financial decision.

"They won't get a higher interest rate but will be secure. If investors want higher interest rates, they will go to the equity market, not bonds," Murray said.

Young said since the current board took office, commissioners have listened to the rating agencies when it came to dealing with budgetary issues and ensuring stability on pension funds.

"The ratings are one of several improvements seen from bond rating agencies since we took office in 2010," Young said.

When the current board took office, Young said, the county had ratings by Fitch at AAA with a negative outlook; Moody's, Aa1 with a stable outlook, and Standard & Poor's, AA+ with a stable outlook.

But there is more to consider than looking at specific current financial reports, County Commissioner David Gray said.

Gray had accompanied Young to New York City to present the county's accomplishments and initiatives to the bond rating agencies.

"I'm just as proud as anyone else to see the ratings," Gray said.

"Bond rating agencies look at a narrow part of the budget," Gray said, "not issues that Frederick County will have to deal with in the long-range planning."

Gray said issues such as overdevelopment, care for the elderly and trust the residents have in the county were not discussed.

"We do look good on paper, but the county is facing a lot of expense from development that was not paid upfront," Gray said.

He said there should be a more broad discussion of issues vital to the future of the county.


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Source: Frederick News-Post (MD)

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