For Immediate Release
Date: March 20, 2014
Savannah City Council on Thursday took advantage of its newly upgraded bond rating and low interest rates to refinance a set of bonds that will save the City more than half a million dollars over the next decade.
It was the City’s third bond refinancing over the past five months, which have amounted to a present value savings for the City of more than $2.4 million. Thursday’s refinancing will save the City $522,498 over the life of the bond, or roughly $52,000 annually. The refinancing of two other bonds late last year saved the City $481,045 and $1,436,709.
“We are pleased that the rating agencies have rewarded City Council’s long-range, conservative fiscal policy and staff’s strong financial management,” said City Manager Stephanie Cutter. “When we are able to borrow money at lower rates, we are able to save taxpayers money.”
In its report issued last week on the most recent bond issuance (attached), Standard and Poor’s Rating Service affirmed the City’s October upgrade to AA+, the highest bond rating Savannah has received in at least the past three decades and the second highest rating available. Standard and Poor’s based its decision on the following factors:
• Adequate economy that serves as the retail, manufacturing, financial, and medical hub for coastal Georgia and neighboring South Carolina;
• Very strong budgetary flexibility, with fiscal 2012 available fund balance at 21% of adjusted operating expenditures, with projections indicating continued strong budgetary flexibility;
• Strong budgetary performance, with consistent general fund and total governmental funds financial results;
• Very strong liquidity providing very strong cash levels to cover both debt service and expenditures;
• Very strong management conditions with strong financial practices and policies;
• Very strong debt and contingent liability position, reflecting the city's low overall debt levels, rapid amortization, and manageable pension and postemployment obligations.
“The stable outlook reflects our view of Savannah's very strong budgetary flexibility, strong budgetary performance, and very strong liquidity, which we expect the city will maintain during the two-year outlook period,” the report stated. “Given the city's conservative debt profile and upcoming debt plans, we expect its debt profile to remain strong. We believe the likelihood of rating movement is limited at this time due to management's very strong track record and Savannah's modestly growing tax base.”