Richardson 1 of 4 Texas Communities with AAA Bond Rating
Standard & Poor's Rating Services has upgraded the standard long-term bond rating and underlying bond ratings for Richardson's general obligation debt to AAA from the previous rating of AA+, the city has announced.
"The upgrade is based on management's maintenance of strong reserves established by policy, which would likely allow the city to maintain its elevated financial condition even in the event of fiscal stresses such as the 2000-02 downturn in the telecommunications sector...as well as the current economic contraction", said S&P's report.
The 'AAA' rating reflects the city's location and participation in the Dallas-Fort Worth economy, coupled with a sizable economic base of its own, which serves as a primary employment center with the significant presence of technology-based companies".
Several factors are considered when assigning a rating, including the local economy, the strength of the city's financial and administrative management, and various debt ratios.
Richardson sells bonds to finance a major portion of its capital improvements program. A bond rating is a measure of a city's ability to repay its debt, and the higher the bond rating, the lower the borrowing costs.
The report also said, "Richardson has a very strong income and wealth levels, as well as strong, tenured, and responsive management. Additional credit strengths include the city's history of very strong financial performance, partly because of its strong financial policies and practices and moderate overall debt levels.:
"The stable outlook reflects our expectation that management will continue to successfully make the necessary adjustments to maintain year-end reserves at, or above, the city's reserve policies," said Paul Jasin, Standard & Poor's credit analyst. "Further economic expansion due to proactive economic incentives will continue to diversify the local economy."