District’s Bond Rating Improves
WASHINGTON (AP) _ District of Columbia general obligation bonds are a better bet than they used to be.
The Wall Street rating firm Standard & Poor’s raised the city’s bond rating from junk bond status or ``BB″ to ``BBB″ Thursday.
``The rating upgrades are based on the district’s improved financial and administrative factors,″ said Standard & Poor’s analyst Parry Young. He cited the district’s ability to post budget surpluses during the past two years as one of the ``big drivers″ of the ratings upgrade.
``It’s a big deal,″ said Marilyn Cohen, president of Envision Capital Management, who manages bond portfolios.
The upgrade indicates Wall Street is more confident now that the city can pay the principal and interest on its bonds back in a timely fashion, Cohen said. That could make a difference when the district tries to raise $500 million through bond sales in June.
Investors ``who swooped in and bought D.C. bonds when others were selling them have made a mint″ off of the new rating, Cohen said.
The change, which does not affect $1 billion in outstanding general obligation debt, is expected to save D.C. taxpayers millions of dollars in future transactions.
``The revenues that this upgrade will bring can mean lower taxes, better services and a greater investment in children and youth,″ said Mayor Tony Williams, who along with D.C. Council Chairwoman Linda Cropp met earlier this month with Standard & Poor’s representatives.
``Confidence in the district government’s management and financial responsibility is growing,″ Cropp said in response to the upgrade. ``The city is establishing a track record of balancing the budget, improving service delivery and making capital improvements.″