Bond sale favorable to city after ratings affirmed

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Moody’s Investment Services and Standard & Poor’s Ratings Services reaffirmed Davenport’s credit ratings for the city’s 2017 bond issuance highlighting that the city’s finances are expected to remain stable and that its unrestricted cash position has improved in recent years.

Davenport’s Aa3 and AA- ratings from Moody’s and Standard & Poor’s, respectively, demonstrate that the city’s bonds are determined to be of high quality and subject to very low credit risk for investors and that the city has a very strong capacity to meet its financial commitments.

Strong ratings from Moody’s and Standard & Poor’s resulted in continued strong interest in and low interest rates for Davenport’s bonds. The City’s main debt issuance for its FY 2017 Capital Improvement Program received a low true interest cost of 2.789%; low borrowing rates for the city result in additional funding for projects instead of paying higher interest costs. In addition to this main issuance, Davenport also refinanced two previous bond issues for a total net present value savings of $1.28 million. Aldermen are expected to approve these bond sales at Wednesday’s City Council meeting.

“Over the past four years, Davenport’s unassigned reserves have grown by 64% and governmental funds have increased available cash by $42.5 million” according to CFO/Assistant City Administrator Brandon Wright. “We are pleased to save $1.28 million in the recent bond sale through the City’s prudent fiscal management and favorable market conditions. The mayor and city council as well as city staff have continued to focus on strengthening the city’s financial position resulting in low borrowing costs.”

“The Aa3 rating is indicative of the city's large tax base in eastern Iowa with slightly below average resident wealth and income; stable financial profile with recent improvement in operating liquidity; and elevated debt and pension burdens.,” according to a release from Moody’s.

Standard & Poor’s release noted the City’s strong liquidity and strong management. “The stable outlook reflects our view that Davenport's budgetary flexibility will likely remain very strong and management conditions will remain strong.”

Both ratings services recognized that better economic indicators, improved debt profile and sustainable liquidity and budget flexibility could lead to higher ratings.