NEW YORK - Standard & Poor's Ratings Services said it raised its underlying rating (SPUR) on Manchester Township, Pa.'s general obligation (GO) bonds to AA-minus from A-plus based on its view of the continued strength of the township's financial position, demonstrated by the maintenance of healthy reserve levels.
Standard & Poor's also assigned its AA-minus long-term rating to the township's series 2010 GO bonds, which are being issued to current refund the township's outstanding series 2005 GO bonds.
Additional factors in support of the rating include the township's local economic base that participates in the York County metropolitan statistical area (MSA); strong household income factors, and extremely strong per capita market values; and a moderate overall debt burden, and manageable future capital needs.
"The stable outlook reflects our expectation that Manchester should be able to maintain reserves above its formal policies," said Standard & Poor's credit analyst Victor Medeiros. Standard & Poor's believes that over the past few years, management's conservative budget practices have provided the township with the revenue flexibility to fund capital and nonrecurring spending annually, while building very strong reserves.
"While the national recession is causing budgeting challenges for the near term, the township is currently maintaining a very strong reserve balance, and has demonstrated the ability to make the necessary changes to manage with balanced operations," said Medeiros.
In Standard & Poor's opinion, future capital needs are modest and as such, debt ratios should remain at moderate levels for the near-and-intermediate term.
Manchester Township (population 14,809) is in York County (AA-minus GO SPUR). Overall debt is moderate in Standard & Poor's view at $4,568 per capita and 4.1% of market value. While moderate, the majority of the township's debt burden is either self-supporting from rates and fees, or overlapping debt from the local school district and the county. The township's direct debt burden is a much lower $726 per capita, 0.7% of market value. The township's debt service carrying charge is moderate in Standard & Poor's opinion at 9% of expenditures, and principal amortization for the township's direct debt is above average, with all debt maturing by 2024. The township has indicated it does not plan to issue additional debt in the near future.
