BRADENTON, Fla. - Just ahead a general obligation refunding, Charleston, S.C, won an upgrade of its GO rating to Aaa from Moody's Investors Service.
The city plans to issue $13 million of refunding bonds on Nov. 6. Proceeds will refund portions of the city's outstanding 2005 and 2007 GO bonds within existing maturities.
The competitive transaction is expected to bring the city present value savings of just over $1 million or 8.68% of refunded par amount, according to the city attorney and bond counsel Charlton deSaussure, a shareholder at Haynsworth Sinkler Boyd PA.
Moody's assigned its Aaa rating to the refunding while raising the city's GOs from Aa1 on Oct. 22. The rater also upgraded the city's certificates of participation rating to Aa1 from Aa2. The outlook was revised to stable from positive.
Charleston has about $51 million of outstanding GOs issued for governmental and business activities, and about $4.2 million in outstanding COPs, according to the 2013 audit.
"The Aaa rating reflects the city's solid financial position, represented by satisfactory reserve levels, recently improved cash position and formal financial policies, strong management with conservative budgeting practices, large and diverse tax base, and manageable debt levels," said Moody's analyst Lauren Von Bargen.
Von Bargen said the stable outlook is based on the expectation that the city's tax base will continue to grow and diversify.
"The upgrade reflects the continued favorable trends and performance first noted in the positive outlook assigned by Moody's last December," said deSaussure.
Charleston, home to a population of 128,700, has seen a rebound in tourism and other economic factors since the great recession. Conde Nast said on Oct. 20 that its readers ranked Charleston the second-best travel destination in the world behind Florence, Italy.
An estimated 4.8 million people visited the city in 2013, resulting in a 16% increase in accommodation taxes and a 24.7% increase in hospitality tax revenues, according to Moody's. Unemployment was 5.2% in July, and below the state's rate of 6.4%.
The city's general fund balance increased to $42.9 million in fiscal 2013 from $28.5 million in 2008. A $13.2 million surplus was reported at the end of 2013.
Von Bargen said the rating lift to Aaa was largely based on the strong oversight and conservative management. She also noted the long-time oversight of Mayor Joe Riley.
Riley, the mayor since 1975, called the rating upgrade "a wonderful financial badge of merit."
Standard & Poor's has rated the city's GO bonds AAA since 2009.