CITY OF PERTH AMBOY MAINTAINS CREDIT RATING DURING COVID-19 PANDEMIC 

Standard & Poors Releases Rating on Refunding Bonds

PERTH AMBOY – April 29, 2020 – S&P Global Ratings has just released its rating report for the City of Perth Amboy.

According to the report, S&P Global Ratings assigned its ‘A+’ long-term rating to Perth Amboy, N.J.’s series 2020A general improvement general obligation (GO) refunding bonds. At the same, time, the American credit agency affirmed its ‘A+’ rating on the city’s existing GO debt. The outlook is stable.

The city’s full faith and GO credit pledge secures the bonds. The proceeds from the series 2020A bonds will current refund all or a portion of the city’s series 2007 refunded bonds.

Perth Amboy is home to many essential businesses who have continued to operate throughout the pandemic and in turn have continued to support the community. Maintaining this excellent credit rating, similar to credit reports generated for individuals, during the COVID-19 pandemic enables the city to save money, which directly benefits residents. The rating also means that whenever it comes time for the city to refinance their debt, they are afforded the ability to negotiate better rates; the city refinancing at a lower rate ultimately saves the taxpayers money in the long run. It is fiscally prudent to strive to maintain a strong credit rating in order to stabilize the tax rate.

The rating was derived by taking into account the following information, listed directly from the report:

• Strong management, with good financial policies and practices under its Financial Management Assessment (FMA) methodology;
• Strong budgetary performance, with an operating surplus in the current fund in fiscal 2018 with another surplus estimated for fiscal 2019, as per the 2019 Annual Financial Statement (AFS);
• Strong budgetary flexibility, with an available fund balance in fiscal 2018 of 12.9% of operating expenditures;
• Very strong liquidity, with total government available cash at 40.6% of current fund expenditures and 2.6x governmental debt service, and access to external liquidity that it considers strongly;
• Very weak debt and contingent liability profile, with debt service carrying charges at 15.6% of expenditures and net direct debt that is 127.7% of general fund revenue, and a large pension and OPEB obligation and the lack of a plan to sufficiently address the obligation, but low overall net debt at less than 3.0% of market value and rapid amortization, with 68.3% of debt scheduled to be retired in 10 years; and
• Strong institutional framework score.

“I am very proud to see Perth Amboy has been assigned an A+ rating for its 2020A general obligation refunding bonds,” said Mayor Wilda Diaz, “This report better helps us conceptualize the current state of the city and where we are succeeding. We will continue to identify cost cutting strategies and prepare for the future impact of COVID-19 to support our community during this defining moment in our city’s history.”

While the City continues to operate under emergency conditions due to the COVID-19 pandemic, The City of Perth Amboy remains focused on its financial situation and pursuit of long-term stability despite the current challenges.

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