This past July Granby’s town treasurer, John Adams, received word that Standard & Poor (S&P) Global Ratings reaffirmed its “AA+” credit rating and stable outlook for Granby’s $5 million series general obligation bonds that will fund the bridge and school projects approved by the town referendum back in late spring of 2019. This is a very favorable position in view of the toss and turns of today’s financial world. The bond credit rating has continually improved over the past 25 years, a reflection of the consistently strong fiscal management and financial condition of the Town of Granby.
Standard & Poor Global Ratings is a credit rating agency which issues ratings indicating how likely it is that public and private companies and governments will be able to pay back the debt they issue. The S&P ratings range from a high of AAA down to D. The result of the AA+ rating is that the recent $5,000,000 General Obligation Bonds induced in a winning bid with a True Interest Cost of 1.54474 percent including a premium of $731,205 paid to the town at the time of purchase. The premium will be used to cover the costs of issuance and initial future debt payments.
In the opinion of S&P Global Rating, the high “AA+” rating assigned to our 2021 20-year bond issue reflects the town’s strong financial operations, evidenced by continued positive general fund results and increased available reserves during the past few fiscal years. In other words, the conservative budgeting moves led by the Board of Finance and carried out by the selectmen and education boards, along with a strong property tax base, have contributed to the town achieving this designation.
S&P views the town’s financial management as adequate with generally conservative budget assumptions, including a five-year historical trend analysis. A formal 10-year capital improvement plan exists. The town’s basic debt-management policy limits debt service to no more than 10 percent of expenses.
Other factors cited in the S&P report included a strong economy: “ The town, with a population estimate of 11,279, is in Hartford County in the Hartford-West Hartford-East Hartford MSA (Metropolitan Statistical Area) which we consider broad and diverse.” The report further pointed out that the town’s grand list grew by 3 percent between 2019 and 2021 due to a stable real estate market with residential properties accounting for 80 percent of the tax base, followed by industrial property at 4.8 percent.
In S&P’s view, “Granby’s debt-and-contingency-liability is very strong.” Total debt service is 5 percent of total governmental-fund expenses, and officials plan to retire just over 70 percent of direct debt during 10 years, a positive credit factor.
What does our “AA+” rating really mean? It means that we can finance our bridge and school projects at a more attractive interest rate and a lower total cost than if we had a less favorable rating. To use a school analogy, if we had a “B” rating rather than an “AA+” rating, the projects would have been more expensive for the town to undertake.
To quote Al Wilke, current member of the Board of Finance, “It’s more than a pretty picture. Coupled with the rating affirmation (AA+), this favorable financing reflects the wisdom of and incredible dedication to many years of patiently pursuing consistent conservative financial principles that place Granby in an enviable financial position among Connecticut’s 169 towns.”