Avondale’s bond rating has been raised from AA to AA+ by the financial service company Standard & Poor’s.
The S&P report raised Avondale’s long term and underlying rating to AA+ on May 31.
The company rates borrowers on a scale of AAA to D. AA+ is the second highest rating a borrowing entity can receive.
Standard & Poor’s credit analyst Kate Palmer said in the report summary that the rating reflects the agency’s view of the “strong maximum annual debt service coverage and local tax base that is tied to the Phoenix metropolitan area.”
The outlook rating on the upgraded ranking for the city is listed as stable.
Charlie McClendon, Avondale city manager, said the rating is a reflection of the city’s hard work to manage finances properly.
“A higher rating means that in the view of the agencies, we’re doing a good job on managing our finances and our debt,” McClendon said. “When they raise it, that’s an indication that they think we’re doing a good job.”
McClendon said the descriptions of the credit ratings can be a little difficult to understand to someone not familiar with the process.
“The way I describe bond ratings is it’s kind of like a [personal] credit score,” McClendon said. “It’s what the ratings agencies think of our credit worthiness.”
The rating increase will provide many benefits to the city, McClendon said.
“The result of having an upgrade is our borrowing costs go down because we’re able to get a lower interest rate,” McClendon said. “It’s good news for our city and our taxpayers, because our borrowing costs will be lower.”
Mayor Marie Lopez Rogers mirrored McClendon’s statements that the city and its staff have worked hard to secure good financial standing.
“Financial stability has been a top priority for us,” Lopez Rogers said. “We want our community to be strong.”
Lopez Rogers said the toughest part of the process was trying to cut back without eliminating services to the community.
“We want to make sure our house is in order financially,” Lopez Rogers said. “[The rating] is telling us that we’ve done that.”
McClendon says the city doesn’t intend to operate any differently because of the new upgrade.
“The reason we got the upgrade is because we were prudent in managing our finances and the amount of debt we had and things like that,” he said. “We’re going to continue on the same course.”
Lopez Rogers said the future looks bright for the city.
“I’m very proud to be the mayor of Avondale right now.”
Shane McOwen can be reached by email at email@example.com.