Thursday, December 12, 2013

City: Hoboken credit rating jumps all the way up to AA+

Expected to Result in Immediate Additional Cost Savings

The credit rating agency Standard & Poor's has assigned a credit rating of AA+ to the City of Hoboken, a dramatic and unprecedented improvement from the City’s prior near junk bond rating. In assigning their second highest obtainable rating, S&P cited Hoboken’s “very strong economy,” “strong management,” “very strong budget flexibility,” “very strong liquidity,” “very strong debt and contingent liabilities profile,” and “good financial management practices.”

“In four years, we went from a city under State fiscal monitoring with near junk bond status to a thriving, financially strong urban center that is the envy of our state,” said Mayor Dawn Zimmer. “I’m proud that since becoming Mayor, we righted our fiscal ship so we can now stand on our own two feet and finance our infrastructure needs so our great City can continue to improve. I want to give a special thank you to Council President Peter Cunningham who has been fighting this fight with me since 2007.”

The most recent credit rating was in 2008, when Moody's issued a Baa3 rating (the S&P equivalent of BBB-), one notch above junk bond status, to hospital bonds guaranteed by the City of Hoboken. Moody's cited the City's “significant deferred charges, annual cash flow borrowing, and a history of financial mismanagement.”

As a result of this new bond rating, the City will save an estimated $1 million in interest over a 10 year period when it refinances existing Parking Utility debt during the next few weeks. The City will also be evaluating all other existing debt to determine if there are other potential cost savings.

Under Mayor Zimmer's Administration, the City has established and maintained a responsible surplus for the first time in years, maintained a low debt level, consolidated and restructured departmental operations, eliminated the use of one-time budget gimmicks, and privatized Hoboken University Medical Center in order to relieve the City of a $52 million hospital bond guarantee.

“Mayor Zimmer and I have prioritized the issue of fiscal responsibility since 2007,” said Council President Peter Cunningham. “It is and will continue to be a priority as it is fundamental to everything we do from infrastructure improvements to future development to ensuring Hoboken is financially protected from the unexpected.”