New bond rating may save Derry hundreds of thousands in interest payments in years aheadBy RYAN LESSARD
Union Leader Correspondent
June 20. 2018 10:19PM
DERRY - Standard & Poor's has upgraded the town's municipal bond rating to AAA, its highest score ever, likely saving homeowners hundreds of thousands of dollars in property taxes in the years ahead.
Town Administrator David Caron announced the upgrade from AA1 to a AAA rating Tuesday. Standard & Poor's is one of the major credit rating agencies alongside Moody's and Fitch Ratings.
The only other municipalities in the state with a AAA rating are Nashua and Portsmouth.
Caron said the rating will result in lower borrowing costs, likely reducing the interest rate it pays on the municipal bonds it issues by up to quarter of a percent.
For a $10 million bond, that could translate to about $25,000 a year in savings or hundreds of thousands over the life of a 20-year bond.
“We're proud of that designation,” Caron said. The rating is a testament to the financial stewardship of Susan Hickey, the town's chief financial officer, he said.
Town Council Chairman Jim Morgan echoed that praise at a recent council meeting.
“A triple-A rating is a phenomenal accomplishment,” he said. “This is a very big deal for Derry.”
Caron also credited Bill Fazioli, the town's financial adviser, for requesting the review of the town's finances that result in the new rating.
Derry scored well for its cash balances, money on hand and capital reserve fund policies.
Caron said an example of good money management is how the town automatically scoops up any savings in health care premiums and places the money in a collective bargaining agreement implementation fund for subsequent fiscal years. That money is then leveraged in securing future union contracts.
The town also scored favorably for its municipal expenditures per capita. Caron said Derry falls just below the median of the top 10 communities by population, not counting Manchester and Nashua.
The current Moody's rating is AA1, Caron said. He doesn't anticipate the town will achieve a AAA rating with Moody's because they score towns by assessed value per capita, which is not as favorable for Derry.
Fazioli will detail how Derry achieved the AAA rating in an upcoming town council meeting, Caron said.