Bond-rating agencies give Harford high mark for financial stability

Low interest rate could save county $1.2 million

January 25, 2004|By Ted Shelsby | Ted Shelsby,SUN STAFF

Three major New York-based bond-rating agencies have given Harford County their second-highest mark for financial stability as the county prepares to go to the market on Tuesday for money to finance a variety of projects.

"This is very, very, very significant," County Executive James M. Harkins said in announcing the upgrading of the county's bond-rating by Standard & Poor's Corp. to AA-plus.

Two other bond-rating agencies, Moody's Investor Service and Fitch Ratings, reaffirmed their equivalent of S&P's rate.

Harkins announced S&P's action Thursday night at what he called a pre-budget public hearing at Joppatowne High School.

The session was held to allow the public to offer suggestions for county spending in the new fiscal year that begins July 1.

Harkins told the approximately 50 people in the audience that the upgrade "was a good thing" because it will allow the county to offer its bonds at a lower interest rate.

He said it could result in a savings of $1.2 million in a $300 million bond issue over 20 years. "If it sounds like I'm crowing, I am," he said.

County Treasurer John Scotten Jr. said the AA-plus rating is one step short of triple-A, the bond-rating industry's gold star of creditworthiness.

Scotten said the county would seek to sell about $27.9 million in bond financing Tuesday.

The funding will help pay for a variety of projects, including construction of Aberdeen High School, additions and renovations at Harford Community College and replacement of old school buses.

The bond issue will also provide money to upgrade the emergency services radio system and improve the telephone systems at the sheriff's office, county government offices and the town of Bel Air.

Harkins said that this was the county's fourth increase in its bond rating over the last four times it has issued bonds.

"Once again," he said in a prepared statement, "Wall Street has taken an in-depth look at Harford County and has confirmed that we're heading in the right direction."

In boosting the county's rating, S&P's noted that it had confidence in the county's sound management practices.

Scotten said the county would begin selling its latest issue in a competitive bidding process starting at 11 a.m. Tuesday.

The County Council will be standing by at 2 p.m. to approve the interest rate and the winning bidder.

The Bond Buyer, a newsletter on public financing, quoted two credit analysts with Fitch saying that its AA-plus rating reflects the county's "consistent record of strong financial management practices, steady economic growth and diversification, and a low tax-supported debt burden with manageable capital needs."

It reported that the rating agency praised the county for continuing to develop independence from its primary employer, the Army's Aberdeen Proving Ground.

The agency noted that APG makes up less than 10 percent of the county's employment base, down from roughly 20 percent in the 1990s.

"As a result, personal income growth has outpaced regional, state and national averages over the past three years," Fitch analysts Joseph D. Mason and Nelsie L. Smith said in their report issued last week.

Scotten said the last time the county went to the bond market with a new issue was in 2002, when it received a rate of 4.27 percent on its bonds.

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