Standard & Poor's Ratings Services said it raised its rating on Newberry Township, Pa.'s outstanding general obligation (GO) bonds to AA-minus from A-plus.
At the same time, Standard & Poor's assigned its AA-minus rating to the township's series 2014A and 2014B GO bonds. The outlook is stable.
"The upgrade reflects the township's continued sound financial operations with strong reserve levels coupled with the self-supporting nature of the municipal authority debt," said Standard & Poor's credit analyst Danielle Leonardis.
The higher rating reflects the township's adequate economy and management; very strong budgetary flexibility, liquidity, and debt and contingent liabilities position; and strong budgetary performance.
The bonds are secured by the township's full faith and GO credit pledge.
However, the township intends to pay all of the debt service on the series 2014A bonds through a subsidy agreement with the Newberry Township Municipal Authority. Under the agreement, the authority covenants to impose and collect sufficient sewer rates to make payments equal to annual principal and interest payments.
Newberry will use proceeds from the series 2014A bonds to refund its series 2009A GO bonds, currently with a net present value savings estimated at 6%, while proceeds from the 2014B bonds will be used to refund the township's 2009B GO bonds.
