City’s bond rating placed on watchlist
Published 12:05 pm Wednesday, December 15, 2010
Vicksburg’s credit rating was placed on review Tuesday by an investment firm that cited a lack of current financial and operating information.
Moody’s Investors Service, a New York-based credit ratings provider of credit ratings and risk analysis, said the city’s Aa3 rating, the agency’s fourth-highest investment grade, is on a “direction uncertain” watchlist review and affects $32.9 million in outstanding debt.
If the information is not supplied within 60 days, the city could face either a lower rating or withdrawal of the rating. For public and private entities, either action can mean a higher cost in borrowing money.
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Reached this morning, Mayor Paul Winfield said he suspects the warning from Moody’s was prompted by incomplete city audits for 2008 and 2009 — both of which have been predicted to be completed within a year, but more than 60 days.
“When I came in, we were four years behind,” said Winfield, who took office in July 2009. “Now we’re two years behind.”
He said he was unaware of Tuesday’s opinion from Moody’s. “We will work diligently to get the ’08 and ’09 audits done.”
Vicksburg received its rating in May, when Moody’s recalibrated it from the A2 rating assigned to the city’s $16.9 million in general obligation bonds for road paving, recreation upgrades and the bridge at Washington and Clark streets.
In May 2009, that rating was given as a correction to reflect the city’s higher rating compared to bond insurer AMBAC, a firm that had the rating downgraded in 2008.
Bonds from the 2007 issue were being repaid to Memphis-based Duncan Williams Inc. at a 4.13 percent annual interest over 10 years, with final payment due in September 2017. Final payment on the 2001 bond issue that went toward sprucing up downtown will be April 1, 2011.
City accountant Doug Whittington said recent payments have reduced the city’s true outstanding debt on the 2001 and 2007 infrastructure-related bond issues to $18.4 million, and was confident the service wouldn’t lower the city’s credit rating.
“The watchlist was placed because (the audits) are being done,” Whittington said. “I would hope they don’t lower it over something that has nothing to do with our creditworthiness.”