Mitchell’s credit rating upgradedCity’s most recent bond issue ranked as A+, up from A rating
By: Tom Lawrence, The Daily Republic
Mitchell’s credit rating for the $13.9 million in bonds it recently issued has been upgraded to A+ by a nationally known agency.
The Standard & Poor’s rating assessment of Mitchell was trumpeted in the new issue of South Dakota Municipalities magazine with a full-page ad by Dougherty & Company. That is a South Dakota investment banking firm that worked with the city to sell the bonds, which will generate money to pay for four major projects in the city in the coming years.
The bonds were split into two sections, with $10 million sold in late 2012 and the remaining $3.9 million sold earlier this month.
Dougherty & Company Senior Vice President Tom Grimmond said the city had an A rating previously, meaning it went up one step. The highest level is AAA+.
“Anything in the A category is a very good rating nationally,” Grimmond said.
The new ratings document was issued Nov. 6. Grimmond said he recommended the city seek to have its rating assessed and upgraded as it prepared to sell its bonds.
Many investors can only invest in A-rated businesses or government entities, Grimmond said. Getting a higher rating opens up a larger field of potential investors.
Mayor Ken Tracy said he welcomed the good news. Tracy said the city’s track record with past bonds, as well as the strong local economy, were factors in the increased assessment.
“We’re proud of the standing and rating that we have,” he said. “I think we’re in good shape.”
The report on Mitchell said the A+ rating was issued because Mitchell is the “region’s retail, service, and transportation hub,” and cited “recent growth in sales tax revenues and a stable local economy” and “above-average per capita retail sales.”
The firm said it would continue to rate the city’s 2009 bonds as an A.
“A credit rating is Standard & Poor’s opinion on the general creditworthiness of an obligor, or the creditworthiness of an obligor with respect to a particular debt security or other financial obligation,” S&P states on its website. “Over the years credit ratings have achieved wide investor acceptance as convenient tools for differentiating credit quality.”
There was a cautionary note in the report.
“In our view, Mitchell’s limited local economy, in part, constrains the ratings,” it stated.