Standard & Poor’s affirms City of Portsmouth AAA bond rating for the ninth year
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PORTSMOUTH–As the nation struggles with the economic impact of COVID-19, Portsmouth has received another AAA rating from S&P Global Ratings (Standard & Poor’s), the internationally recognized, 150-year-old authority on credit ratings and market intelligence.
“The city’s financial practices are strong, well embedded, and likely sustainable. Management is conservative when arriving at revenue and expenditure assumptions and it incorporates historical trends when formulating the budget,” the report stated.
In its assessment of the City’s finances as AAA-worthy, S&P noted the City’s very strong budgetary flexibility, strong budgetary performance, very strong liquidity and strong debt position, as well as its contingent liabilities position. The report noted, “The AAA rating on the city's General Obligation bonds is underpinned by the city's strong management team that uses long-term financial planning to mitigate risks from one-time economic shocks such as those that occurred at the onset of the pandemic."
In announcing the S&P decision and sharing the report with the City Council, City Manager Karen Conard said, “On behalf of Finance Director Judie Belanger and the finance team, I am pleased to share with you the summary report from Standard & Poor’s which affirms the City’s AAA bond rating. The report tells a very strong and stable financial story, of which we can all be extremely proud.”
S&P analysts assess the City’s financial condition, operating performance, policies and the economic environment. Most importantly, they form an opinion about the City’s risk management strategies. S&P then rates the City’s creditworthiness with a letter grade, with AAA as the highest rating.
According to S&P, “In total, there are 17 ratings, even though Standard & Poor's only uses four different letters. This is achieved by doubling or tripling letters—the more the better. Ratings can also include a plus sign (which is better than standalone letters) or a minus sign (which is worse than standalone letters).”
Having held a AAA rating since 2013, Portsmouth now holds a sterling reputation for investment by those who subscribe to the bonds by which the City funds its major capital improvements. The AAA rating also means that the City pays the lowest interest rates on those bonds and enjoys more flexibility when it comes to refinance its callable bonds, as appropriate, saving taxpayers hundreds of thousands of dollars.
Commenting that the City’s AAA bond rating is higher than that of the nation, S&P analysts said, “We rate the city higher than the nation because we believe Portsmouth can maintain better credit characteristics than the nation in a stress scenario based on its predominantly locally-derived revenue base, and our view that pledged revenue supporting debt service on the bonds is at limited risk of negative sovereign intervention.”