For the second time in the last few months, the Town of Middletown gets good news on the financial front, something that could save the community big money moving forward
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MIDDLETOWN MAINTAINS OUTSTANDING BOND RATING AGAIN
MIDDLETOWN (APRIL 26, 2020) – The Town of Middletown has maintained its outstanding bond rating.
For the second time in four months, Moody’s Investors Service rated Middletown as “Aa1,” among the highest for a municipality in the State of Rhode Island.
The news came late last week, when Moody’s released word of its updated credit analysis of the community as the town prepared to refinance $2.3 million in old debt. That move later next month is projected to save Middletown taxpayers about $310,000 over the remainder of the bond.
“We are very excited to learn that Moody’s has confirmed the credit worthiness of the Town by maintaining its ‘Aa1’ credit rating, especially during these challenging times,” Finance Director Marc Tanguay said. “This rating means that the Town could save approximately $300,000 over the next 10 years.”
According to the Moody’s official “Credit Opinion” letter, the town had a number of credit strengths working in its favor. Among those included a “strong fund balance and cash position” as well as “modest long-term liabilities” and a “strong bond structure.”
The letter also went onto comment prominently about how the local economy benefits from the stability provided by the presence of Naval Station Newport, the fourth – and sometimes overlooked -- community on Aquidneck Island.
On the flip side, the letter noted the credit challenges facing Middletown included the cyclical nature of the hospitality and tourism portion of the economy. The letter also said the community carried “above average pension liability,” something the Town Council and local leaders continue to work to address.
Moody’s said if the town boosted its reserve levels, reduced its adjusted pension liabilities or saw a significant bump in the economy, its bond rating could improve. A downgrade was possible should there be a noteworthy decrease in reserves, a sharp rise in debt levels carried by the town or a significant negative change in the economic profile of the town, Moody’s indicated.
To many residents and businesspeople, the town’s bond rating might seem like trivia.
However, it can be an important factor on several fronts. When the town’s bond rating is good, the community can potentially save tens of thousands of town taxpayer dollars with lower interest rates.
The bond rating by a neutral third party like Moody’s also gives an independent outside look at the town and its finances. This is important because it shows the health of the town’s finances, stability and overall wellbeing, something that can factor into the decision to relocate to the area or grow an existing home or business.
Moody’s said the average municipal bond rating in Rhode Island is a couple steps below at Aa3.
Town Administrator Shawn J. Brown applauded the Town Council, town staff and the community itself about the achievement.
“Without everyone in this together, pulling in the same direction, this type of accomplishment is much more difficult to achieve,” Brown said. “Everyone gets it, that we’re all in this together to make Middletown the best place to live, work and play.”