A strong economy and very strong management were cited by Fitch Ratings and Standard & Poor’s Global Ratings when affirming Sugar Land’s “AAA” rating for $21.1 million certificates of obligation issued by the city through a competitive sale on April 18.
The City received bids from 10 underwriters, with the award going to JP Morgan Securities, who bought the bonds at a 2.78 percent true interest cost. Both rating agencies are global leaders in credit ratings, commentary and research that provides perspective and insight for investors. The “AAA” rating is the highest rating a bond can carry and represents a bond with minimal risk due to the strong financial management practices of the city.
According to Standard & Poor’s: “The city has a projected per capita effective buying income of 180 percent of the national level and per capita market value of $143,848. Overall, the city’s taxable value grew by 4.8 percent over the past year to $12.6 billion in 2016 …. We view the city’s management as very strong, with strong financial policies and practices under our Financial Management Assessment methodology, indicating financial practices are strong, well embedded, and likely sustainable.” In its release, Fitch recognized the city’s strong operating performance, solid expenditure flexibility and ample reserves. An excerpt from an analysis reads, “Fitch expects the city to demonstrate financial resilience during a moderate economic downturn based on its revenue raising capacity, solid expenditure flexibility, and currently healthy financial cushion.”
Sugar Land has achieved its strong fiscal health through years of financial policy development. The policies have been in place since 2002 and are reviewed and adopted by resolution every two years, allowing for updates to be made as the city develops.
“The city that we have today is not the same city that was here 15 years ago,” said Director of Finance Jennifer Brown. “Having policies that can grow and adapt to our changing needs is important.”
The affirmation of the top bond rating recognizes the commitment by City Council and staff to ensuring sound financial oversight of city resources.
“The AAA ratings demonstrate confidence in the city’s ability to manage its finances,” added City Manager Allen Bogard. “This confidence validates that our proactive financial management as reflected in our Financial Management Policy Statements is a key to our success.”