On Thursday Moody’s Investors Service reaffirmed Gwinnett County’s top credit rating. Here’s what you need to know:
The rating: Gwinnett County is refinancing $165.9 million in water and sewer authority bonds to take advantage of low interest rates. Moody's assigned an AAA rating to the new bonds and affirmed Gwinnett's AAA rating on other debts. AAA is the highest rating the service awards, indicating Gwinnett's debts are "of the highest quality, with minimal credit risk." The rating allows Gwinnett to borrow money at lower rates. The county has maintained its AAA rating since 1997.
The reason: Moody's cited Gwinnett's sizable tax base, diverse economy and low debt levels. It cited Gwinnett's "sound financial management," ample reserve funds and a "demonstrated commitment towards maintaining its financial position." That includes a 2009 property tax increase that – while unpopular – allowed Gwinnett to boost fund balances and increase payments to the county pension system and other post-employment benefit obligations.
Moody’s also noted the county eliminated an $18 million operating deficit this year. And it said Gwinnett will continue to benefit from its location in metro Atlanta, which retains long-term growth prospects despite the current recession.
Challenges: The service also cited potential problems, including a declining property tax base and pending litigation over Gwinnett's only source of drinking water: Lake Lanier. Moody's said "the failure to secure a favorable resolution (of the litigation) could materially affect the system by 2012."
What's next: New ratings from two other agencies – Fitch Ratings and Standard & Poor's – are expected soon.
About the Author
