HARLINGEN — The city’s new bond rating is better than the U.S. government’s.
Fitch Ratings has upgraded the city’s bond rating to AA+, with a “stable outlook,” Assistant City Manager Gabriel Gonzalez said yesterday.
“That means the city is stable and the outlook looks good and there are no worries on the debt we’re going to issue,” Gonzalez said.
Meanwhile, he said, the federal government’s bond rating stands at AA+, with a negative outlook.
A bond rating is like a credit score, Gonzalez said.
“This is fantastic news for the City of Harlingen,” Mayor Chris Boswell said in a statement. “It constitutes recognition from the bond rating agency of excellent fiscal management and responsibility by our city leaders over time. Our finance department and city manager deserve recognition for this accomplishment.”
Fitch, which rated the city at AA- last year, upgraded the city’s bond rating as officials here prepare to refinance $23.5 million in bonds at lower interest rates to save about $2.8 million.
Now, the upgraded bond rating will mean extra savings, Gonzalez said.
“Investors will see the AA+ and see it’s a good investment,” Gonzalez said. “The better the rating, the lower the interest rate. So it will save on interest.”
Fitch upgraded the city’s bond rating based on factors including the ratio of the city’s overall debt of $50.9 million compared with the city’s annual general fund revenue of $42.1 million.
Factors also included the city’s revenue growth outpacing the national economic expansion rate and the city’s tax rate of 58 cents per $100 valuation falling below the state average.
Fitch also considered the city’s cash reserve fund of $15.9 million, which makes up 35.6 percent of general fund expenditures.
