Demopolis retains AA- rating
The City of Demopolis retained its AA- rating following a review by Standard & Poor’s.
Mayor Mike Grayson made the announcement prior to Thursday night’s city council meeting.
Grayson said the city’s rating was upgraded from A+ to AA- three years ago.
According to Standard & Poor’s “U.S. Local Governments General Obligation Ratings: Methodology and Assumptions,” the credit agency reviews seven key factors in coming up with a credit rating: institutional framework, economy, management, budgetary flexibility, budgetary performance, liquidity, and debt and contingent liabilities.
“This rating means we are three notches from the absolute top rating of AAA,” Grayson said.
The ratings from Standard & Poor’s from top to bottom are as follows: AAA, AA+, AA, AA-, A+, A, A-, BBB+, BBB, BBB-, BB and B.
A city’s credit rating can impact the interest it pays on new general obligation bonds for special projects, such as road repairs.
“Having a AA- rating means that rating agencies, such as Standard & Poor’s, recognize the city as being credit worthy and makes bond issues more marketable,” Grayson said. “The reduced credit risk with a solid rating means the city is well run, in regards to debt to revenue, financial reserve and stable tax revenue streams. Financial goals and policies are also in place and financial trends are in the right direction. This means the city has the opportunity to go to the markets in the event of an emergency or an opportunity.”
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