SAUGUS — Officials are celebrating Saugus’ second consecutive AA+/Stable bond rating from ratings and analytics company S&P Global.
Town Manager Scott Crabtree said the ranking — the highest in the town’s history — signifies Saugus’ credit worthiness and capacity to meet its financial requirements.
“I’m proud that (S&P) has reaffirmed the AA+/Stable bond rating for the town of Saugus,” Crabtree said. “This is excellent news for the taxpayers in our community, as it demonstrates that our appointed and elected officials and town staff are managing the residents’ tax dollars responsibly, efficiently, and effectively.”
He explained the rating helps the town by making it a more desirable candidate for borrowing money and achieving better borrowing rates, adding that the reaffirmed bond rating and lower interest rates will increase taxpayer borrowing savings, which can then be reallocated for other town services and operating budgetary necessities.
In 2014, national rating agency Moody’s Investors Service upgraded Saugus’ bond rating from A2 to A1. During this upgrade, Moody’s also removed a “negative outlook” status attached to the town.
Two years later, in 2016, S&P Global Ratings further increased Saugus’ rating three grades to an AA+/Stable rating, which the town has since maintained.
According to the company’s website, an AA rating indicates an obligor’s strong capacity to meet its financial commitments and reflect’s S&P’s opinion of the town’s:
— Strong management and good financial policies and practices under financial management assessment methodology, with strengths including management’s strong revenue and expenditure assumptions when budgeting, strong intra year budgetary monitoring and long-term financial plan.
— Strong liquidity, with total government available cash at 13.4 percent of total governmental fund expenditures and 2.2x governmental debt service, and access to external liquidity that S&P considers strong.
— Strong budgetary flexibility, wth the available fund balance in fiscal 2019 at 14.2 percent of operating expenditures.
— Adequate budgetary performance, with operating surpluses in the general fund in fiscal 2019 and expected surplus, on a budgetary basis, in fiscal 2020.
— Strong institutional framework score.
— Very strong economy, with access to a broad and diverse MSA.
“The finance committee is extremely proud that the town of Saugus has received a reaffirmed AA+/Stable bond rating,” said finance committee chair Kenneth L. DePatto. “It is an amazing feat to jump three grades in the rating scale within a short period of time and to now have it reaffirmed again.
“As a taxpayer, I am grateful, and as a finance committee member, I am proud to be a part of these accomplishments.”
Crabtree said Saugus has already benefited from more than $7 million savings in bonds borrowing for its Middle-High School due to the town’s solid financial standing, and said taxpayers can anticipate additional borrowing savings with other large capital improvement investments, such as the five-year Capital Improvement Plan, as well as refinancing of existing debt.
He added the town will continue to research and assess additional opportunities to refinance and save additional tax dollars with the reaffirmed AA+ bond rating.
“This bond rating is more important than ever to maintain in this financial environment,” Crabtree said. “It is amazing to see what we can accomplish when we all work together respectfully and professionally as we speak in one voice for our community.”
